Key Takeaways ✅ Not every share option is taxed like an ordinary unapproved award, because Ireland has schemes with genuinely kinder treatment ✅ Gains on qualifying KEEP options can be exempt from Income Tax, USC and PRSI at exercise, with CGT arising only when the shares are eventually sold ✅ SAYE and approved profit sharing arrangements are Revenue approved routes with their own conditions and tax treatment ✅ The scheme name alone proves nothing, so the first question about any award is the exact plan type and whether every condition has actually been met ✅ For growing Irish businesses, a well chosen share scheme is one of the strongest staff retention tools available

Most of what gets written about share options in Ireland describes the tough version. The gain taxed like salary through payroll, with more than half potentially gone before you’ve decided anything. That’s the reality for ordinary unapproved options, and it’s the version we meet most often at Money Maximising Advisors Limited. But it is not the whole story. Ireland has schemes designed to treat share options far more kindly, and whether you’re an employee trying to understand what you actually hold, or a business owner trying to keep your best people, they deserve a proper look. So here’s the friendlier side of the share scheme world, explained without the jargon.

First, the baseline: how ordinary options are taxed

To see why the approved schemes matter, you need the comparison. For a typical unapproved option, the gain on exercise is treated as employment income, facing Income Tax, USC and employee PRSI through payroll, and for a higher rate taxpayer the combined deduction can exceed half the gain. Our full guide to share options and the tax when you exercise walks through that world in detail. Hold that picture in mind, because everything below is measured against it.

KEEP: the Key Employee Engagement Programme

KEEP exists to help smaller Irish companies compete for talent against deep-pocketed multinationals, and its headline benefit is genuinely significant. Gains on the exercise of qualifying KEEP options can be exempt from Income Tax, USC and PRSI entirely. Instead of a payroll tax event at exercise, the tax story moves to Capital Gains Tax when the shares are eventually sold, currently at the 33% rate with the annual €1,270 exemption available. Think about what that shift means in money terms. On a €100,000 option gain, the ordinary route can see more than €50,000 deducted through payroll at exercise, while a qualifying KEEP holder pays nothing at that point and faces CGT only on an eventual sale. The timing is kinder too, because the tax arrives when the money actually arrives.

The conditions are the whole game

Here’s the caution that has to sit beside the headline. KEEP is built on strict conditions, covering the type of company, the employee’s working commitment, limits on the value of options that can qualify and more, and the detailed criteria are set out in Revenue’s KEEP guidance. Every condition matters, because an award that misses one may simply fall back into the ordinary unapproved world, kind name and all. The scheme name alone proves nothing. The first technical question about any award is always the exact type of plan and whether every statutory and scheme condition has actually been met, and that’s precisely the first thing worth checking on any statement that says KEEP on it.

A worked comparison in plain numbers

Let’s make the difference concrete with round numbers. Imagine an option gain of €100,000, meaning shares worth €150,000 acquired for €50,000. Down the ordinary unapproved route, that €100,000 faces Income Tax, USC and PRSI through payroll at exercise, and for a higher rate taxpayer the deduction can pass €50,000 before a single share is sold. If the shares later grow by another €20,000 and are sold, that growth faces CGT on top. Down a qualifying KEEP route, the €100,000 exercise gain triggers no payroll tax at all. The tax event waits for the sale, where CGT at 33% applies to the gain at that point, after the annual exemption. Same shares, same growth, radically different outcome, and the entire difference rests on the scheme qualifying. That’s why the conditions section below isn’t fine print. It’s the whole ballgame.

SAYE: save as you earn

Save As You Earn schemes take a different, gentler approach. The employee saves a fixed amount from pay each month over a set period, and holds an option to buy shares at a price fixed at the start, often at a discount to the market value at that time. At the end of the savings period, there’s a choice. If the shares have risen, the savings can be used to exercise the option and buy at the old, lower price. If the shares have fallen, the employee can simply take back the savings and walk away. That built-in safety net is what makes SAYE one of the most employee-friendly structures in the market, and as a Revenue approved scheme it carries its own tax treatment and conditions, which the plan documents will set out. For an employee, the practical question is usually simple. If your employer offers SAYE, understand the terms, because the downside protection makes it worth serious consideration.

Approved profit sharing: shares instead of cash

Approved profit sharing arrangements let a company give employees shares, typically funded from profits, through a Revenue approved structure. Subject to the scheme’s limits and holding conditions, shares received this way can enjoy relief from the income tax charge that a straight cash bonus would suffer, though other charges and rules still apply and the shares generally need to be held for the required period to keep the benefit. The detail lives in the scheme rules and Revenue’s conditions, but the principle is easy to grasp. For the same company outlay, an approved share award can be worth meaningfully more in an employee’s hands than the equivalent cash, which is why established Irish employers have used these arrangements for decades.

For employers: retention you can’t buy with salary alone

If you run a growing Irish business, here’s the strategic case in one paragraph. Your best people are being courted by employers with bigger salary budgets than yours, and matching pay euro for euro is a race you may not win. Equity changes the conversation. A well designed share scheme gives your key people a real stake in what they’re building, rewards them for staying through the years that matter, and does it in a way that can be dramatically more tax efficient than bonuses, especially where KEEP conditions can be met. It also sends a message that salary never can. You’re not just an employee here, you’re an owner. Share schemes sit naturally alongside the pensions, protection and financial wellbeing supports that make up a complete staff offering, which is exactly the ground our corporate financial wellness work covers, and for owner directors, decisions like these connect closely to your own directors pension and exit planning.

Choosing between the schemes

If you’re an employer weighing the options, the schemes solve different problems, so start with the problem rather than the scheme. KEEP is targeted, built for qualifying smaller companies that need to lock in specific key people with meaningful equity upside, and its conditions confine it to businesses that fit the criteria. SAYE and approved profit sharing are broader instruments, designed for wide participation across a workforce, which makes them natural choices for building an ownership culture rather than retaining a handful of stars. Administration, trustee arrangements, communication to staff and the interaction with your existing pay and pension structure all belong in the design conversation too, because a scheme your people don’t understand retains nobody. The best outcomes we see start with a clear answer to one question. Who exactly are you trying to keep, and for how long?

For employees: find out what you actually hold

Every piece of tax analysis above depends on one fact you might not know yet. What type of scheme are you actually in? Don’t rely on the name in the email or the word a colleague used. Ask for the plan rules and your award agreement, and look for the scheme type, the conditions attached and what happens at exercise. If your award turns out to be an ordinary unapproved option, our guides on the tax at exercise and what to do after you exercise map the road ahead. If it’s KEEP, SAYE or an approved arrangement, the road is different and often kinder, but only if the conditions have genuinely been met. Ten minutes with the plan documents now beats an expensive surprise later, and it’s exactly the kind of thing we check for clients in a first meeting.

Five questions to send your plan administrator

When you do ask, keep the questions specific. Which scheme type is this award under, and can you confirm it in writing? Have all the qualifying conditions been met, and who checked? What exactly happens at exercise, and will anything go through payroll? Are there holding periods or restrictions after I receive the shares? And what deadlines apply to me this year? Five questions, one email, and you’ll know more about your award than most option holders ever learn. Bring the answers to any advice meeting and the conversation starts miles ahead.

Frequently Asked Questions

Is a KEEP option completely tax free?

No. Qualifying KEEP options can be exempt from Income Tax, USC and PRSI at exercise, but Capital Gains Tax can still arise when the shares are eventually sold, currently at 33% after the annual €1,270 exemption.

How do I know if my options are KEEP options?

Check the plan rules and your award agreement rather than relying on the name. KEEP depends on strict company, employee and award conditions, and an award that misses a condition may be taxed as an ordinary unapproved option.

What happens with SAYE if the share price falls?

That’s the scheme’s built-in protection. At the end of the savings period you can simply take your savings back instead of exercising, so a falling share price costs you the opportunity rather than your money.

Can any company set up a KEEP scheme?

No. KEEP is aimed at qualifying smaller companies and carries detailed conditions on the business, the employees and the awards. The current criteria are set out in Revenue’s guidance and should be checked carefully before anything is promised to staff.

Do approved schemes remove all tax on shares?

No scheme removes tax entirely. Approved arrangements change when and how tax arises, often very favourably, but conditions, holding periods, other charges and an eventual CGT position can all still apply.

Is a share scheme worth it for a small employer?

Often yes, where retention of key people matters and the conditions can be met. The design questions, which scheme, which employees, what limits, deserve professional input, because the value sits in getting the structure right from day one.

Final Thoughts

The tax system treats share options harshly by default and generously by design, and the difference between the two is simply whether the right scheme was used and its conditions were met. For employees, the job is to find out what you actually hold before assuming anything about the tax. For employers, the opportunity is a retention tool that salary alone can’t match. Both sides of that conversation happen at our table every week at Money Maximising Advisors Limited, from checking an employee’s award against the scheme rules to helping business owners build a share and benefits offering their best people won’t want to leave behind. Whichever side you’re on, the first conversation is free, so bring the plan documents and let’s see what your scheme is really worth.

Money Maximising Advisors Limited  |  Unit 3, Office 6, Liosban Business Park, Tuam Rd, Galway  |  +353 91 393 125  |  office@mmadvisors.ie

_{Money Maximising Advisors Limited is regulated by the Central Bank of Ireland (C154250). This article is for information purposes only and does not constitute financial or tax advice.}