Pearse Doherty (Donegal, Sinn Fein)

9 o’clock

Tairgim leasú Uimh. 12:

In page 28, between lines 19 and 20, to insert the following:

"Report on the restriction of share-based remuneration to SMEs 19. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the impact of the PRSI exemption for share-based remuneration for large corporations on the sustainability of the social insurance fund.".

Molaim leasú Uimh. 12 ó thaobh PRSI agus nach bhfuil PRSI i bhfeidhm ó thaobh íocaíochta atá déanta do chomhlachtaí móra nuair atá scaireanna tugtha dá chuid fostaithe in áit airgid thirim. I propose this amendment in relation to restricting the PRSI exemption to SMEs and not having the PRSI exemption available to large corporations. This is brought forward on the basis of the sustainability of the Social Insurance Fund, which is obviously very important. It is important that fund is replenished and that we have an adequate amount in that fund to meet the needs of workers and citizens in the future.

This amendment is about share-based remuneration and we have seen a number of reports done by the Department of Finance and, indeed, by Indecon on behalf of that Department on share-based remuneration and looking at international practices or competitors, what is available and what is not available. The Indecon report which focused on this was published last year. The Department of Finance found that some countries treat benefit accruing from share-based remuneration as taxable salary and is subject to social security contributions. Those countries include Lithuania, Estonia, Latvia, Israel, the United States, Germany, Poland and Italy. It found that attractive tax advantage schemes are provided for small enterprises in many important competitor countries and they included Portugal, Denmark, France, Spain, Britain, Germany, Italy, Sweden and the United States. The Indecon review on taxation of share-based remuneration found that:

... detailed analysis suggests that aspects where Ireland’s approach is out of line with some competitor countries include lower eligibility levels, the treatment of benefit in kind and the tax treatment of restricted stock units. Ireland’s PRSI exemption however appears generous compared to many countries where such exemptions are more focused on SMEs.

We also see the value of share-based remuneration schemes has increased substantially in the past number of years. For example, in 2019 the value of share-based remuneration schemes stood at €945 million whereas the last figures I have data for shows that has more than doubled in those four years. In 2023 it reached over €2.1 billion. Where has that growth occurred? It has occurred in the multinational, the large company, sector where it has gone from €749 million - that is €749 million out of €945 million, so it was always those companies that dominated the area, which was understandable - to nearly €1.8 billion. Obviously, we imagine the figures for 2024 and 2025 will have further increased.

What is this about? It is about ensuring that share-based remuneration can continue and that it is there. There are very strong arguments for share-based remuneration in relation to investment and buy-in of staff and so on. It is actually asking whether we need to exempt PRSI for share-based remuneration for large multinational companies, many of which are in scope of pillar 2, which means they have turnover in excess of €750 million, or whether it is better to ensure, given the Social Insurance Fund and making sure it is sustainable, that those larger companies continue to do share-based remuneration but have to pay PRSI on the share-based remuneration, although not small and medium enterprises where we would like to encourage more of that type of activity.

The figures for micro-companies and small companies are quite small considering the value of the share-based remuneration scheme - it is growing for small businesses but staying static for micro ones.

That is what the amendment is about. It is not about eliminating it completely. Rather, share-based remuneration would continue to exist and would be an issue for companies. It is about ensuring that the PRSI exemption does not apply to large corporations and the benefit is restricted to SMEs. This issue was identified by the Department of Finance in the Indecon review commissioned by the Department just two years ago. The report identified that we are a wee bit out of line and more generous compared with other countries. That is okay. Sometimes we can be more generous. We have to have tax advantages. I am all for that, tax sovereignty and all the rest. However, there is an argument that this generosity does not need to be extended to large corporations. The Social Insurance Fund is important as we have an ageing population. This is one way to ensure that funds are maintained and replenished.

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