Introduction of Key Employee Engagement Programme a welcome initiative for SMEs and their employees
Consultation on merging USC and PRSI should hopefully continue Government focus on the area of personal tax and reward to create more competitive tax system
10 October 2017: Commenting on the measures announced with regards to the taxation of share schemes, Daryl Hanberry, Tax Partner, Deloitte said:
“The new Key Employee Engagement Programme for SMEs announced today will be a share scheme similar to the Enterprise Management Incentive scheme in the UK and will be positively received by private Irish companies and their employees. This will defer the tax on exercise of share options until the point of sale, at which point Capital Gains Tax will apply. This will remove some of the blockers that currently exist - such as an illiquid market for sale and valuation requirements for example - while also providing a tax effective way of remunerating employees.
“The Minister has not taken the opportunity to announce any broader changes to the taxation of share schemes, which will be disappointing for domestic and foreign MNCs who do not meet the SME thresholds. However, it would be hoped that there would be a continued focus by the Government on the area of reward in 2018, particularly given the consultation on merging the USC and PRSI.”
“While the Minister had limited capacity for tax measures, Budget 2018 continued the path of positive adjustments to the USC and the relevant bands. Our marginal rate of tax remains too high at 52% but hopefully this is something that can be considered in future Budgets when there are more financial resources.
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