Share Schemes

Share schemes in Ireland offer employers a valuable opportunity to incentivise employees and align their interests with the long-term success of the business. These schemes provide tax-efficient ways of attracting and retaining talented employees, while also giving them an opportunity to build wealth through owning shares in the company. By introducing an employee share scheme, businesses can improve 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 available in Ireland. The legal structure will depend on the company’s goals but, in most cases, a trustee is either required or recommended.

Involving an independent professional trustee:

• Enhances the value and reputation of the scheme

• Ensures proper and compliant governance

• Provides reassurance to participants, employers and other stakeholders

• Recognises and addresses external factors, including legislative and regulatory developments

• Provides impartiality and expertise in decision-making

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

• Is, in certain circumstances, required by legislation

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

• Approved Profit-Sharing Schemes (APSSs): These schemes allow employees to acquire shares in their employer company on favourable tax terms. An APSS has . An APSS also offers 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 approval from Revenue.

• Save As You Earn (SAYE) schemes: This share option scheme set up in conjunction with a savings scheme. SAYE schemes allow employees to save part of their salary after tax for a period of three or five years, then use the savings to buy company shares without paying income tax. These schemes can be set up under a trust.

• Restricted or Clogged share schemes: Clog schemes allow employees to acquire shares on the condition that they do not sell them for a specified period (the “clog” period). This type of scheme can provide significant tax savings to both employees and the employer. Again, the shares may be held by trustees.

• Unapproved executive share schemes: Unapproved schemes may still require shares to be held for employees by a trustee or nominee on behalf of the executive shareholders. This allows for easier administration and ensures legal compliance with the legal documentation.

With our long experience of providing trustee services (and an in-house team of legal and trust practitioner experts), we work with companies to provide the most appropriate supports and services for their needs.

Please contact our team of pension trustee experts for further information.