Bruton failed to convince Noonan on SME tax break
Published 04/11/2015 | 02:30
Jobs Minister Richard Bruton unsuccessfully pushed Michael Noonan to introduce a tax-advantaged share options scheme for small and medium-sized businesses in the Budget designed to allow SMEs to attract top talent.
Mr Bruton argued that there should be no income tax levied on the granting and, or, exercising of options, as well as a favourable Capital Gains Tax rate applying on disposal.
In a pre-Budget submission, released under Freedom of Information, the Department of Jobs said Ireland has general tax advantaged share measures, but said as a result of recent tax changes, while employers remain exempt from employer PRSI, "there appears to be little incentive for employees to take stock options over cash."
"The critical impediment is the income tax, USC and PRSI that are currently triggered on the exercise of a share option of up to 52pc which the employee must pay directly to revenue with 30 days," the submissions stated.
"No cash earnings arise directly from the exercise of share option. Employees working in SMEs, whose shares are not listed on a stock exchange and where there is no readily available market, do not have the option to sell a sufficient portion of their shares to generate the cash to pay the tax like their peers in listed companies."
The Department said the SME employee must find the cash for the tax payment from their own resources. "This places SMEs... and scaling companies at a competetive disadvantage when seeking to attract talent to grow the business."