The Irish ProShare Association has held a meeting with the Department of Finance to propose a two-stage approach to growing employee ownership in Ireland through the use of Employee Ownership Trusts (EOTs).
The Department of Finance welcomed the IPSA briefing and is considering its position.
IPSA also held a meeting with the Labour Party on the issue, at which George Lawlor TD, Spokesperson for Enterprise, Tourism and Employment, confirmed the party’s manifesto commitment to support employee ownership and agreed to pursue appropriate measures.
Further meetings are anticipated with other political representatives to secure cross-party support for the two-stage approach and have the changes included in this year’s Budget.
Members of the IPSA EOT Working Group and representatives from Wolfgang Digital Limited briefed Department of Finance officials on:
- The proven public policy benefits of employee ownership, for businesses, employees, communities and the economy.
- Employee ownership as a business succession solution, with more than 1,800 companies converting to employee ownership trust (EOT) ownership in the UK in the decade since the EOT was recognised in tax law and more than one UK company a day now converting to EOT ownership.
- The tax obstacles that exist in Ireland.
- EOT tax provisions in the UK, in particular a relief from capital gains tax on selling a controlling or 100% stake to an EOT, that have worked so effectively to bring employee ownership to the attention of company owners and advisers as a popular succession solution, and
- How a two-stage process would lead to creating and growing Irish employee ownership.
Stage one
Employee ownership is an established business succession solution in the United States and the UK but is practically unheard of in Ireland. This is because of tax obstacles that do not exist in the US and the UK. The first stage of IPSA’s plan is to remove these obstacles through a mix of Revenue guidance and an exemption from the discretionary trust tax regime for EOTs. A sale to the trustee of an EOT would not then be taxed unfairly in comparison to a trade sale or other form of succession solution. IPSA calculates there would be no loss of revenue from “levelling the playing field” in this way.
Stage two
The second stage is for the Government to agree to the recommendation of the 2024 Indecon Review on Share-Based Remuneration in Ireland, which is to reform the taxation of Irish EOTs in line with the treatment of such arrangements in the UK.
IPSA provided a similar briefing to the Labour Party at Leinster House. IPSA EOT Working Group members Marie Flynn (Chair of IPSA), Alan Coleman and Graeme Nuttall met with Deputy Lawlor and the party’s Political Director Cathal McCann. IPSA also explained its aim of securing all-party support for growing employee ownership, an aim shared by the Labour Party.
It is expected that any decisions on fiscal policy regarding EOTs will be considered through the normal Irish budgetary process which would result in any changes being announced in Budget 2026 later this year.
IPSA Chair Marie Flynn said: “Gaining political engagement on Employee Ownership Trusts is a priority for IPSA. It is crucial for convincing the Government to follow the advice of the 2024 Indecon Review to reform the taxation of EOTs in Ireland, so that business owners and employees can benefit from an economic model that has proven popular and successful in the UK, US, Australia and Canada.”
Graeme Nuttall said: “More than one company transitions to employee ownership using an EOT every day in the UK. This popularity is down to their simplicity and practicality – particularly as a succession solution. Instead of a business being sold in a trade sale or closing, it is sold to its employees. This benefits everyone: the selling shareholders, the business, its employees, the community in which the business is based and the wider economy.”
Alan Coleman said: “EOTs have the potential to transform the economic landscape in Ireland by creating thousands of new employee-owners at businesses throughout the country. Wolfgang Digital believes in the EOT model so much, we’ve adopted it despite it being incredibly expensive from a tax perspective. We’ve done this because we want to demonstrate to the Government the incredible public policy benefits of EOTs: increased productivity, greater innovation, more jobs, better work, reduced inequality, a greater community and green economy focus, all contributing to a more resilient economy. We’re pushing for an Ireland in which everybody has the opportunity to own where they work.”
Deputy George Lawlor said: “Employee ownership has a proven track record in the UK, and it’s a model I believe can be of huge benefit to Irish enterprise by providing a pathway for succession, but also critically for rewarding workers, and helping SMEs retain and recruit talent. I intend to engage with the Minister for Enterprise and Finance to progress the policy and legislative changes needed to ensure this transformative model is incentivised in Ireland and I look forward to working with IPSA to realise this goal.”
