Taxes Consolidation Act 1997 section 519

Employee share ownership trusts - ESOT

Section 519 provides tax reliefs for qualifying employee share ownership trusts approved by the Revenue Commissioners, including corporation tax deductions for contributions, income tax exemptions on dividends, and capital gains tax exemptions on certain disposals of securities.

• A company may deduct the costs of establishing an approved ESOT and contributions made to its trustees, provided eligible employees benefit and the funds are spent on qualifying purposes within the expenditure period.
• ESOT trustees are exempt from income tax on dividends from trust securities spent within the expenditure period, and from CGT on gains from open market sales or redemptions where proceeds are used to repay borrowings, pay interest, or make payments to representatives of a deceased beneficiary.
• CGT exemptions also apply to transfers of securities by ESOT trustees to APSS trustees or to the personal representatives of a deceased beneficiary, and such payments or transfers are exempt from income tax.
• All reliefs cease from the effective date of any withdrawal of Revenue approval for the ESOT.