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Call for new share scheme for employees
(Pic: Shutterstock)

05 Mar 2024 / taxation Print

Call for new share scheme for employees

Law firm Arthur Cox has called for the introduction in Ireland of an employee-ownership trust scheme, based on what it describes as the “successful” Employee Ownership Trust (EOT) in Britain.

The call comes in a submission to the Department of Finance made as part of a public consultation on share-based remuneration.

The firm says that Ireland can no longer rely on a low corporation-tax rate to attract multi-national companies and must also improve its offering in areas such as personal tax.

“Therefore, to position Ireland as an attractive location for senior employees to base themselves and alleviate the consequences of the very high personal income-tax rates, an improved system of share-based remuneration, is necessary,” Arthur Cox argues.


The firm backs a scheme based on the EOT, which was introduced in Britain in 2014.

This allows the owners of a company to pass ownership to the employees through the establishment of a trust that becomes the majority owner of the company.

The trustees own the company and are bound by the terms of the trust to apply their control of the company for the benefit of all the employees of the company.

A company operating under an EOT structure is therefore not owned and controlled by individual shareholders, but by the trustees of the EOT, Arthur Cox explains.


It points out that, order to qualify for favourable tax treatment, the EOT must satisfy certain conditions:

  • It must be trading,
  • The scheme must be open equally to all employees (in service for more than 12 months), and
  • The trustees must be entitled to more than 50% of the company – more than 50% of the ordinary share capital and voting rights, profits available for distribution, and assets on a winding up.

Disposals of shares in a trading company or the parent company of a trading group to the trustees of an EOT can be made fully free of capital gains tax.
If the shares are disposed of in the form of a gift, it can be made free of capital-acquisitions tax.

In addition, qualifying annual bonuses of up to £3,600 annually per employee can be made from the trust, free of income tax for the employees and available as a corporation-tax deduction for the company.


The law firm highlights the outcome of a public consultation last year on the scheme, in which the British tax authorities concluded that “the reliefs have been successful” in encouraging the creation of employee-owned firms.

The Arthur Cox submission also calls for the elimination or extension of the 20-year time-limit on the holding of shares in an Employee Share Ownership Trust.

It also highlights aspects of legislation on discretionary trusts and close companies that it believes could be amended or clarified to encourage more employee participation.


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