Charlie McConalogue (Donegal, Fianna Fail)
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119. To ask the Minister for Finance the estimated cost to the Exchequer of a proposal (details supplied) for the key employee engagement programme in order to attract and retain employees in farm enterprises. [45336/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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In Budget 2018 I introduced the Key Employee Engagement Programme with the objective of supporting SMEs in Ireland in competing with larger companies to recruit and retain key employees. Share options can provide key employees with a financial incentive linked to the success of the company and may improve the attractiveness of an SME employment offer.

The Deputy has requested a costing regarding a proposal to extend the KEEP relief to all SME business structures including limited companies, partnerships and sole trades; to extend the definition of share options to include tangible stock of a business, such as livestock; and to allow family member employees in farm enterprises to qualify for the relief.

Farm enterprises which are SME companies as defined in the KEEP legislation may qualify for the relief, subject to meeting the other criteria. Businesses structured as partnerships and sole trades have significantly different legal forms than limited companies and would not have the ability to issue a 'share option' comparable to an option over the ordinary shares in a limited company. Similarly, tangible stock, such as livestock, is materially different to company shares. Therefore it is not possible to include partnerships or sole trades within the scope of the KEEP relief or to treat an option over livestock in a similar matter to an option over company shares, and as a result a potential cost for extending KEEP in such a manner cannot be estimated.

With regard to family employees, there is an anti-avoidance provision in the KEEP legislation which provides that the relief cannot be claimed where the employee, together with any "connected persons", controls more than 15% of the ordinary share capital of the company. The definition of connected person includes close family members, so in practice it is unlikely that the KEEP relief would be available to family members of the business owner (assuming he/she holds more than 15% of the company), regardless of whether it is a farming or non-farming business.