Simon Harris (Wicklow, Fine Gael)

I thank Deputies Nash and Lawlor for tabling this amendment. I acknowledge that Deputy Lawlor had an initial conversation with me on it this week. I appreciate his genuine interest and expertise in this. I also find myself in much agreement with some of the points Deputy O'Callaghan made in terms of how we keep companies that we as a country invest so much in getting to that point in Irish ownership. It is a real policy issue that deserves genuine consideration. I am pleased the Deputy had a constructive meeting with my colleague, the Minister for enterprise, in relation to that. I also thank Deputy Nash for acknowledging the work that my Department has carried out in this area and the work the Department of Enterprise, Tourism and Employment also has. That is a recognition by us that these are issues that merit consideration.

The Deputies will be aware that last year, an independent review of share-based remuneration was carried out by Indecon on behalf of my Department, which was published last year. This review, which included a public consultation, considered EOTs, and makes a recommendation pertaining specifically to this matter, suggesting that there is "merit in considering reforming the taxation of employee ownership trusts in line with the treatment of such arrangements in the UK." The Deputies have contrasted the current situation here with the situation in the UK in their comments.

The term employee ownership trusts does not appear in Chapter 2 of Part 17, or Schedule 12 of the Taxes Consolidation Act. However, as alluded to by the recommendation of the Indecon review, preferential tax treatment exists for EOTs in the UK. Preferential tax treatment is not available for these structures in Ireland. That is the issue people are trying to tease through.

I want Deputies to know consideration is being given to all recommendations arising from the review, and my officials have engaged with relevant stakeholder groups in this regard. As was discussed on Committee Stage of this Bill, Department officials have met with representatives of the Irish Pro-Share Association, IPSA, to discuss industry proposals on employee ownership trusts in recent months. Following these discussions, I am informed by officials that changes to discretionary trust tax, capital gains tax, which was referenced here, and to the close company surcharge, have been raised by stakeholders as potential necessary amendments to the tax acts to facilitate EOTs.

As part of any consideration of amendments to the tax Acts in light of this recommendation, we need to analyse and evaluate both the potential benefits and Exchequer costs of implementing changes to facilitate the establishment of EOTs, in line with my Department’s guidelines for tax expenditure evaluation. Generally speaking, and I will make this point alongside what I have already said, the Deputies will appreciate the decision to adopt an EOT, or similar structure, is a strategic decision for any individual business or company. Many other factors can also influence this decision that are ultimately outside my remit or the remit of my Department.

My sense in terms of how we best take this forward now is that, given that the Indecon review of share-based remuneration considered and made recommendations on EOTs, and that my Department is currently engaging with relevant stakeholders in this regard, I am not sure it is necessary to carry out a further review on this matter. However, I accept it is necessary to have further engagement on the matter. I would be happy to meet with Deputy Lawlor, as he requested. I am happy to engage with interested Deputies, including the three who have spoken on this amendment and to keep them up to date with our stakeholder engagement.

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