After a false start Donohoe revises employee SME share incentives scheme
PASCHAL Donohoe is attempting to overhaul the share option scheme for SMEs and encourage more uptake in the initiative.
The so-called KEEP scheme was introduced last year, aimed at reducing the tax burden attached to share options at SMEs.
Share options are seen as an important way of enabling small and medium businesses to attract and keep talent. They allow financial incentives to be given to staff without having to hand over cash.
But the scheme had been criticised by industry players who said it was too restrictive in terms of the amount of share options that fell into its remit.
“I am aware that take-up has been less than expected and I have decided to take early action now,” Mr Donohoe said. The Finance Minister is increasing the amount that can be awarded in one year in share options to 100pc of salary from 50pc.
He is also putting in place a lifetime limit for employees of €300,000 in terms of the amount of share options they can be awarded.
That replaces a €250,000 limit in three consecutive tax years.
The Government will also move to regulate crowdfunding and overhaul the Employment and Investment Incentive Scheme (EIIS) in moves aimed to increase the diversity of funding sources available to business.
Peer-to-peer lender Linked Finance welcomed the move to regulate crowdfunding.
“Developing a formal regulatory framework for the sector will help promote best practice and continued lender confidence,” said chief executive Niall Dorrian.
The EIIS, a programme to encourage investment in companies by providing certain tax reliefs but has struggled to be relevant to firms, is to be made “more efficient”.
Mr Donohoe also said he was extending corporation tax relief for profit-making start-ups which create and maintain jobs, extending the programme until 2021.