Taxes Consolidation Act 1997 section 128F

Key Employee Engagement Programme (KEEP)

Section 128F provides for the Key Employee Engagement Programme (KEEP), a share option scheme that allows qualifying small and medium-sized enterprises to grant share options to key employees and directors free from income tax, USC and PRSI at the point of exercise, with Capital Gains Tax applying instead on a subsequent disposal of the shares.

• KEEP applies to qualifying share options granted on or after 1 January 2018 and before 1 January 2029, exempting gains on exercise from income tax, USC and PRSI, with CGT applying on a later disposal of the shares.
• A qualifying company must be an SME, incorporated and resident in the State (or in another EEA state or the United Kingdom and trading through a branch or agency in the State), carrying on a qualifying trade, unquoted, and not in financial difficulty, with a cap of €6,000,000 on the market value of issued but unexercised options.
• A qualifying individual must be an employee or director working at least 20 hours per week (or devoting at least 75% of working time) for the qualifying company or group, must not hold more than 15% of the ordinary share capital, and must hold the options for at least 12 months before exercise.
• The option price must be at least equal to market value at the date of grant, individual limits of €100,000 per year and €300,000 in all years apply, and the company must file a KEEP1 return with Revenue by 31 March following the year of grant or exercise.