Minister McGrath welcomes the commencement of amendments to KEEP scheme

The Minister for Finance Michael McGrath today welcomes the commencement of four amendments to the KEEP scheme which were introduced in Finance Act 2022. The amendments were subject to State aid approval from the European Commission which was recently received.

Commenting on the commencement Minister McGrath stated:

“I am delighted to announce that I have commenced the four outstanding KEEP amendments contained in Finance Act 2022, following receipt of State aid approval from the European Commission.

"KEEP is a focused scheme aimed at improving the attractiveness of the Irish SME employment offering. It recognises that the improved competitiveness of Irish SMEs supports the creation and maintenance of employment, which in turn supports economic growth.

"These amendments extend and expand the current KEEP scheme, and are based on my department’s continued engagement with stakeholders to ensure that the scheme is working to support Irish SMEs.”

KEEP is a tax efficient share option scheme, introduced in 2018, and was designed to facilitate the use of share based remuneration by unquoted SME companies to attract key employees. Under the scheme, employees are given an option to acquire shares at a future date, at a fixed price. Employees who exercise KEEP options are exempt from a liability to Income Tax, USC and PRSI on any gain arising, however they pay Capital Gains Tax on subsequent disposal of the shares acquired. In addition, as is generally the case with share based remuneration schemes, shares awarded through KEEP are exempt from employer PRSI.

As a notified State aid all amendments to KEEP are subject to approval by the European Commission before they can be commenced. The formal decision letter from the Commission regarding these amendments has now been received. The amendments commenced make a number of substantial improvements to the scheme, reflecting feedback that emerged from comprehensive stakeholder engagement.

These amendments provide for the following:

the extension of the scheme to the end of 2025. This continuation of the scheme beyond its current sunset date of end of 2023, provides certainty to stakeholders as to the future of the scheme
that shares that were acquired through company buyback of shares can qualify for KEEP
the increase of the limit for the total market value issued but unexercised qualifying share options for qualifying companies and qualifying holding companies from €3 million to €6 million
changes to the types of shares that qualify for KEEP from new ordinary fully paid up shares to ordinary fully paid up shares, so that existing shares a company holds can qualify