Share Schemes

Share schemes offer Irish employers a valuable opportunity to incentivise employees and aligning their interests with the long-term success of the business. These schemes provide tax-efficient ways for companies to incentivise and retain talented staff, while also giving employees a chance to build wealth through share ownership. Implementing an employee share scheme can enhance employee engagement, foster a culture of ownership, and ultimately contribute to the overall growth and competitiveness of Irish businesses. 

There is a range of share schemes in Ireland available to companies, the legal structure will depend on what the company wishes to achieve, but a trustee is typically required or recommended.

The involvement of an independent professional trustee:

• Enhances the value and perception of the scheme;

• Ensures proper and compliant governance;

• Provides reassurance to the participants, the employer(s) and other stakeholders;

• Ensures external factors, including legislative and regulatory developments, are recognised and addressed;

• Provides impartiality and expertise in relevant decision making;

• Provides ready access to a market-wide perspective on all aspects of the scheme;

• and is, in certain circumstances, required by legislation.

Examples of schemes in which a trustee will or may have a role include:

• Approved profit-sharing schemes (APSSs). APSSs allow employees to acquire shares in their employer company on favourable tax terms. An APSS also has tax benefits for the employer. The shares must be held by trustees under a trust deed approved by Revenue.

• Employee share ownership trusts (ESOTs). ESOTs are generally set up in conjunction with an APSS and provide tax benefits to the employer. As with APSSs, the trust requires Revenue approval.

• Save as you earn (SAYE) schemes. An SAYE scheme is a share option scheme set up in conjunction with a savings scheme. SAYE schemes let employees save part of their post-tax salary for a period of three or five years before using their savings to acquire shares in their employer company without income tax. Such arrangements can be set up under trust.

• Restricted or clogged share schemes. Clog schemes allow shares to be acquired by or for employees on the condition that they do not sell those shares for a specified period, known as the “clog” period. Such a scheme can offer significant income tax savings to the employee and to the employer. Again, the shares may be held by trustees.

• Unapproved executive share schemes. Unapproved schemes may require shares to be held for employees by a trustee or nominee for the executive shareholders for ease of administration and to ensure compliance with the legal documentation.

With its long experience of providing trustee services and an in-house team of legal and trust practitioner experts, ITL can discuss with companies and their advisers, and provide, the appropriate share scheme trustee services for their requirements.

For further information, contact our team of pension trustee experts.