WHAT ARE THE ADVANTAGES FOR THE COMPANY?
WHAT ARE THE KEY RULES?
A company can distribute shares up to a total value of €12,700 to each employee on an annual basis. Rules differ for each APSS approved but typically employees are eligible after six months of service. All participants in the scheme must be offered similar terms. The shares allocated must be non-redeemable ordinary shares. Shares can be sold before the official three-year period elapses, but negative tax implications will arise.
Schemes such as this can be lucrative for employees and as such are regarded as an effective way to recruit and retain key personnel. Employers make no PRSI contribution when remuneration is through equity rather than cash or other benefits. Companies can claim tax relief on the outlay involved in trustees acquiring shares and for the cost of establishing the scheme. Companies have control over the process, in that they can decide every year if they want to make awards. The interests of management and employees become more aligned, with all actively incentivised to ensure that the company performs as well as possible.
Prior approval from Revenue is required.
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