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Taxes Consolidation Act, 1997 (Number 39 of 1997)

[1]>

128F Key Employee Engagement Programme

(1) In this section—

connected persons” shall be construed in accordance with section 10;

control” shall be construed in accordance with section 432;

EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

EEA state” means a state which is a contracting party to the EEA Agreement;

emoluments” has the same meaning as in section 983;

excluded activities” means—

(a) adventures or concerns in the nature of trade,

(b) dealing in commodities or futures in shares, securities or other financial assets,

(c) financial activities,

(d) professional services companies,

(e) dealing in or developing land,

(f) building and construction,

(g) forestry, and

(h) operations carried out in the coal industry or in the steel and shipbuilding sectors;

financial activities” has the same meaning as in [4]>section 488<[4][4]>section 489<[4];

market value” shall be construed in accordance with section 548;

option price” means a predetermined price at which an employee or director can purchase a share at some time in the future;

ordinary shares” means shares forming part of a company’s ordinary share capital;

professional services” means—

(a) services of a medical, dental, optical, aural or veterinary nature,

(b) services of an architectural, quantity surveying or surveying nature, and related services,

(c) services of accountancy, auditing, taxation or finance,

(d) services of a solicitor or barrister and other legal services, and

(e) geological services;

qualifying company” means, subject to subsection (10), a company that—

(a) is incorporated in the State, or in an EEA state other than the State [25]>or in the United Kingdom<[25], and is resident in the State, or is resident in an EEA state other than the State [25]>or in the United Kingdom<[25] and carries on business in the State through a branch or agency,

(b) exists wholly or mainly for the purpose of carrying on a qualifying trade on a commercial basis with a view to the realisation of profit, the profits or gains of which are charged to tax under Case I of Schedule D,

(c) throughout the entirety of any relevant period—

(i) is an unquoted company none of whose shares, stock or debentures are listed in the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange other than—

(I) on the market known as [26]>the Enterprise Securities Market of the Irish Stock Exchange<[26][26]>the Euronext Growth market operated by the Irish Stock Exchange plc trading as Euronext Dublin<[26], or

(II) on any similar or corresponding market of the stock exchange—

(A) in a territory other than the State with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(B) in an EEA state other than the State [25]>or in the United Kingdom<[25],

and

(ii) is not regarded as a company in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty1,

and

(d) at the date of grant of the qualifying share option—

(i) is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 20032 concerning the definition of micro, small and medium sized enterprises, and

(ii) the total market value of the issued but unexercised qualifying share options of the company does not exceed €3,000,000;

[5]>

qualifying group” means, subject to subsection (2A), a group of companies that consists of the following (and no other companies):

(a) a qualifying holding company,

(b) its qualifying subsidiary or subsidiaries, and

(c) as the case may be, its relevant subsidiary or subsidiaries;

qualifying holding company” means a company—

(a) which is not controlled either directly or indirectly by another company,

(b) which does not carry on a trade or trades, and

(c) whose business consists wholly or mainly of the holding of shares only in the following (and no other companies), namely, its qualifying subsidiary or subsidiaries and where it has a relevant subsidiary or subsidiaries, in that subsidiary or in each of them;

<[5]

[6]>

qualifying individual”, in respect of a qualifying share option, means an individual who throughout the entirety of the relevant period—

(a) is a full time employee or full time director of the qualifying company, and

(b) is required to devote substantially the whole of his or her time to the service of the company, with a minimum requirement for the individual to work at least 30 hours per week for the qualifying company;

<[6]

[6]>

qualifying individual”, in relation to a qualifying share option, means an individual who throughout the entirety of the relevant period is—

(a) in the case of a qualifying group, an employee or director of a qualifying company within the group, and who is required to work at least 20 hours per week for such a qualifying company or to devote not less than 75 per cent of his or her working time to such a qualifying company, and

(b) in the case of a qualifying company not being a member of a qualifying group, an employee or director of the qualifying company, and who is required to work at least 20 hours per week for the qualifying company or to devote not less than 75 per cent of his or her working time to the qualifying company;

<[6]

[7]>

qualifying share option” means a right granted to an employee or director of a qualifying company to purchase a predetermined number of shares at a predetermined price, by reason of the individual’s employment or office in the qualifying company, where—

(a) the shares which may be acquired by the exercise of the share option are new ordinary fully paid up shares in a qualifying company, which carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed,

(b) the option price at date of grant is not less than the market value of the same class of shares at that time,

(c) there is a written contract or agreement in place specifying—

(i) the number and description of the shares which may be acquired by the exercise of the share option,

(ii) the option price, and

(iii) the period during which the share options may be exercised,

[2]>

(d) the total market value of all shares, in respect of which qualifying share options have been granted by the qualifying company to an employee or director, does not exceed—

(i) €100,000 in any one year of assessment,

(ii) €250,000 in any 3 consecutive years of assessment, or

(iii) 50 per cent of the annual emoluments of the qualifying individual in the year of assessment in which the qualifying share option is granted,

<[2]

[2]>

(d) the total market value of all shares, in respect of which qualifying share options have been granted by the qualifying company to an employee or director, does not exceed—

(i) €100,000 in any one year of assessment,

(ii) €€300,000 in all years of assessment, or

(iii) the amount of annual emoluments of the qualifying individual in the year of assessment in which the qualifying share option is granted,

<[2]

(e) the share option is exercised by the qualifying individual in the relevant period,

(f) the shares are in a qualifying company, and

(g) the share option can not be exercised more than 10 years from the date of grant;

<[7]

[7]>

qualifying share option” means a right granted to an employee or director of a qualifying company to purchase a predetermined number of shares in the qualifying company or, in the case of a qualifying group, in the qualifying holding company of the qualifying group, at a predetermined price, by reason of the individual’s employment or office in the qualifying company, where—

(a) the shares which may be acquired by the exercise of the share option are ordinary fully paid up shares in the qualifying company or, in the case of a qualifying group, in the qualifying holding company,

(b) the option price at date of grant is not less than the market value of the same class of shares at that time,

(c) there is a written contract or agreement in place specifying—

(i) the number and description of the shares which may be acquired by the exercise of the share option,

(ii) the option price, and

(iii) the period during which the share options may be exercised,

(d) the total market value of all shares, in respect of which qualifying share options have been granted in the qualifying company or, in the qualifying holding company, to an employee or director does not exceed—

(i) €100,000 in any year of assessment,

(ii) €300,000 in all years of assessment, or

(iii) the amount of annual emoluments of the qualifying individual in the year of assessment in which the qualifying share option is granted,

(e) the share option is exercised by the qualifying individual in the relevant period,

(f) the shares are in a qualifying company or, in the case of a qualifying group, in the qualifying holding company, and

(g) the share option cannot be exercised more than 10 years from the date of grant of that option;

<[7]

[8]>

‘qualifying subsidiary”, in relation to a qualifying holding company, means a company in respect of which more than 50 per cent of its ordinary share capital is owned directly by the qualifying holding company;

<[8]

qualifying trade” means trading activities other than excluded activities;

relevant period” means a period of not less than 12 months beginning on the date a qualifying share option is granted to an employee or director of the qualifying company and ending on the date the share option is exercised by the qualifying [9]>individual.<[9][9]>individual;<[9]

[10]>

relevant subsidiary”, in relation to the qualifying holding company, means a company in respect of which more than 50 per cent of its ordinary share capital is owned indirectly by the qualifying holding company, but for the purposes of this section a relevant subsidiary in relation to a qualifying holding company shall not be regarded as a qualifying company.

<[10]

(2) For the purposes of this section—

(a) an individual shall not be a qualifying individual if his or her employment or office is not capable of lasting at least 12 months from the date on which the qualifying share option is granted,

(b) an individual shall cease to be a qualifying individual if he or she, together with any connected persons, acquire beneficial ownership of, or the ability to control, directly or indirectly, or through the medium of a connected company or connected companies or by any other indirect means, more than 15 per cent of the ordinary share capital of the qualifying company [11]>or, in the case of a qualifying group, of the qualifying holding company,<[11] and

[12]>

(c) where a qualifying company allows an individual to exercise a qualifying share option, despite having ceased to be an employee or a director of the company, the individual shall be deemed to satisfy the requirements set out in paragraphs (a) and (b) of the definition of “qualifying individual” in subsection (1), in respect of the period the individual is not employed by the company, if the exercise occurs within 90 days of the individual ceasing to hold the employment or office concerned with the qualifying company.

<[12]

[12]>

(c) where a qualifying individual is permitted to exercise a qualifying share option despite having ceased to be an employee or director of a qualifying company, the individual shall be deemed to satisfy the requirements as set out in the definition of “qualifying individual” in subsection (1) in respect of the period the individual is not employed by a qualifying company, where the individual exercises the option within 90 days of the individual ceasing to hold the employment or office concerned with the qualifying company.

<[12]

[13]>

(2A) For the purposes of this section, a group of companies shall be treated as a qualifying group only where—

(a) throughout the entirety of the relevant period—

(i) there is at least one qualifying company in the group which is a qualifying subsidiary,

(ii) the activities of the qualifying group, excluding the qualifying holding company, consist wholly or mainly of the carrying on of a qualifying trade,

(iii) each company in the qualifying group is an unquoted company none of whose shares, stock or debentures are listed on the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange, other than on—

(I) the market known as [27]>the Enterprise Securities Market of the Irish Stock Exchange<[27][27]>the Euronext Growth market operated by the Irish Stock Exchange plc trading as Euronext Dublin<[27], or

(II) any similar or corresponding market of the stock exchange in—

(A) a territory, other than the State, with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(B) an EEA state other than the State,

and

(iv) each company in the qualifying group is not regarded as a company in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring nonfinancial undertakings in difficulty1,

and

(b) at the date of grant of the qualifying share option—

(i) the qualifying group is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 20032 concerning the definition of micro, small and medium sized enterprises, and

(ii) the total market value of the issued, but unexercised, qualifying share options of the qualifying holding company does not exceed €3,000,000.

<[13]

(3) Any gain realised on the exercise of a qualifying share option granted on or after 1 January 2018 and before 1 January 2024 shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

[14]>

(4) A company whose business consists wholly of the holding of shares in a qualifying company shall be a qualifying company for the purposes of this section, where the shares are directly held and comprise of the entire issued share capital.

<[14]

(5) A period of less than 12 months shall be deemed to be a relevant period where, following the grant of a share option, during that period—

(a) a transaction is entered into pursuant to a compromise, arrangement or scheme applicable to or affecting all the ordinary share capital of the qualifying company [15]>or, in the case of a qualifying group, of the qualifying holding company,<[15]

(b) a transaction takes place that forms part of a general offer made to holders of shares of the same class as the shares acquired by the director or employee or of shares in the same company [16]>or, in the case of a qualifying group, in the qualifying holding company<[16] and made in the first instance on a condition such that if it is satisfied the person making the offer will have control of that company [16]>or, in the case of a qualifying group, in the qualifying holding company<[16], or

(c) the qualifying company allows an issued but unexercised qualifying share option to transfer to an individual’s estate on their death, where—

(i) the qualifying share option is exercised within 12 months of the individual’s death,

(ii) the deceased would have satisfied the requirements set out in [17]>paragraphs (a) and (b) of <[17]the definition of ‘qualifying individual’ in subsection (1) up to the date of his or her death, and

[18]>

(iii) the company is a qualifying company throughout the relevant period.

<[18]

[18]>

(iii) throughout the relevant period, the company is a qualifying company or, in the case of a qualifying group, the holding company is a qualifying holding company.

<[18]

(6) Notwithstanding section 547(1)(a), the qualifying individual shall be deemed for the purposes of the Capital Gains Tax Acts to have acquired the shares, acquired by the exercise of the qualifying share option, for a consideration equal to the amount paid for their acquisition.

[19]>

(7) Where in any year of assessment a qualifying company grants a qualifying share option under this section, or allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives notice of the assignment of such a right, the qualifying company shall deliver particulars thereof to the Revenue Commissioners, in a format approved by them, not later than 31 March in the year of assessment following that year.

<[19]

[19]>

(7) Where in any year of assessment a qualifying company grants a qualifying share option under this section, allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives notice of the assignment of such a right, the qualifying company shall deliver particulars thereof to the Revenue Commissioners, in a format approved by them, not later than 31 March in the year of assessment following that year.

<[19]

[20]>

(7A) Where in any year of assessment a company within a qualifying group grants a qualifying share option under this section, allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives notice of the assignment of such a right, a qualifying company designated by the qualifying group shall deliver particulars thereof on behalf of the qualifying group to the Revenue Commissioners, in a format approved by them, not later than 31 March in the year of assessment following that year.

<[20]

(8) [3]>A qualifying company shall, when required to do so by notice in writing by the Revenue Commissioners, furnish the Revenue Commissioners, within such time as may be specified in the notice (not being less than 30 days), with such information, in relation to the relief provided by this section, as the Revenue Commissioners may reasonably require from the qualifying company for the purposes of publishing the following information in relation to all qualifying companies:<[3][3]>The Revenue Commissioners may publish the following information in relation to all qualifying companies[21]>, or, as the case may be, qualifying groups<[21]:<[3]

(a) the name of the company [22]>or, in the case of a qualifying group, of each member of it and a subsequent reference in this subsection to a ‘company’ shall, as appropriate, be construed as including a reference to each such member<[22];

(b) the address of the company;

(c) the Companies Registration Office number of the company;

(d) the date of exercise of the qualifying share options;

(e) the amount of the tax advantage granted under this section;

(f) in respect of the principal activity carried on by the company, the NACE classification code, as determined in accordance with Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 20063 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No. 3037/90 as well as certain EC Regulations on specific statistical domains;

(g) the territorial unit, within the meaning of the NUTS Level 2 classification specified in Annex 1 to Regulation (EC) No. 1059/2003 of the European Parliament and of the Council of 26 May 20034 amended by Regulation (EC) No. 1888/2005 of the European Parliament and of the Council of 26 October 20055, Commission Regulation (EC) No. 105/2007 of 1 February 20076, Regulation (EC) No. 176/2008 of the European Parliament and of the Council of 20 February 20087, Regulation (EC) No. 1137/2008 of the European Parliament and of the Council of 22 October 20088, Commission Regulation (EU) No. 31/2011 of 17 January 20119, Council Regulation (EU) No. 517/2013 of 13 May 201310, Commission Regulation (EU) No. 1319/2013 of 9 December 201311, Commission Regulation (EU) No. 868/2014 of 8 August 201412 and Commission Regulation (EU) No. 2066/2016 of 21 November 201613, in which the company is located.

(9) No obligation as to secrecy imposed by section 851A shall preclude the Revenue Commissioners from publishing information obtained by them under this section.

[23]>

(10) A company shall not be regarded as a qualifying company for the purposes of this section where the company fails to comply with the requirements of subsection (7) or (8).

<[23]

[23]>

(10) A company or group shall not be regarded as a qualifying company or, as the case may be, a qualifying group for the purposes of this section where the company, or in the case of a qualifying group, the company designated for the purposes of subsection (7A), fails to comply with subsection (7) or (7A).

<[23]

(11) This section shall not apply unless the qualifying share option is granted for bona fide commercial reasons, the main purpose of which is to recruit or retain employees in [24]>the qualifying company<[24][24]>a qualifying company<[24] and is not part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax.

(12) Where this section applies relief under Part 16 shall not apply.

1. OJ No. C249, 31.7.2014, p. 1

2. OJ No. L124, 20.5.2003, p. 36

3. OJ No. L393, 30.12.2006, p. 1

4. OJ No. L154, 21.6.2003, p. 1

5. OJ No. L309, 25.11.2005, p. 1

6. OJ No. L39, 10.2.2007, p. 1

7. OJ No. L61, 5.3.2008, p. 1

8. OJ No. L311, 21.11.2008, p. 1

9. OJ No. L13, 18.1.2011, p. 3

10. OJ No. L158, 10.6.2013, p. 1

11. OJ No. L342, 18.12.2013, p. 1

12. OJ No. L241, 13.8.2014, p. 1

13. OJ No. L322, 29.11.2016, p. 1

<[1]

[1]

[+]

Inserted by FA17 s10(1). In operation from 1 January 2018 per S.I. No. 643 of 2017.

[2]

[-] [+]

Substituted by FA18 s11(1)(a). Comes into operation on 1 January 2019 as per S.I. No.424 of 2019.

[3]

[-] [+]

Substituted by FA18 s11(1)(b). Comes into operation on 1 January 2019.

[4]

[-] [+]

Substituted by FA18 s25(2)(a). Comes into operation on 1 January 2019.

[5]

[+]

Inserted by FA19 s11(1)(a)(i). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[6]

[-] [+]

Substituted by FA19 s11(1)(a)(ii). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[7]

[-] [+]

Substituted by FA19 s11(1)(a)(iii). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[8]

[+]

Inserted by FA19 s11(1)(a)(iv). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[9]

[-] [+]

Substituted by FA19 s11(1)(a)(v). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[10]

[+]

Inserted by FA19 s11(1)(a)(vi). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[11]

[+]

Inserted by FA19 s11(1)(b). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[12]

[-] [+]

Substituted by FA19 s11(1)(c). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[13]

[+]

Inserted by FA19 s11(1)(d). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[14]

[-]

Deleted by FA19 s11(1)(e). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[15]

[+]

Inserted by FA19 s11(1)(f)(i). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[16]

[+] [+]

Inserted by FA19 s11(1)(f)(ii). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[17]

[-]

Deleted by FA19 s11(1)(f)(iii). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[18]

[-] [+]

Substituted by FA19 s11(1)(f)(iv). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[19]

[-] [+]

Substituted by FA19 s11(1)(g). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[20]

[+]

Inserted by FA19 s11(1)(h). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[21]

[+]

Inserted by FA19 s11(1)(i)(i). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[22]

[+]

Inserted by FA19 s11(1)(i)(ii). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[23]

[-] [+]

Substituted by FA19 s11(1)(j). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[24]

[-] [+]

Substituted by FA19 s11(1)(k). Comes into operation on such day or days as the Minister for Finance may appoint by order or orders, either generally or with respect to different provisions or purposes.

[25]

[+] [+] [+]

Inserted by the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 s25. Comes into operation on 31 December 2020 as per S.I. No. 723 of 2020.

[26]

[-] [+]

Substituted by FA20 s74(a) and sched1(b)(i). This Schedule shall have effect on and from 19 December 2020.

[27]

[-] [+]

Substituted by FA20 s74(a) and sched1(b)(ii). This Schedule shall have effect on and from 19 December 2020.