Question to the Minister for Finance (Mr. Michael Noonan, TD)
To ask the Minister for Finance the way the universal social charge is applied to employee share ownership schemes; if private and semi-State companies are treated differently in applying the charge to such schemes; and if he will make a statement on the matter. – Jerry Buttimer
For WRITTEN ANSWER on 27, May, 2015.
REPLY
The legislation governing an Employee Share Ownership Trust (ESOT) is contained in Section 519 and Schedule 12 to the Taxes Consolidation Act 1997. A company must apply to the Revenue Commissioners if they wish to operate such an ESOT. The Revenue Commissioners will only approve the ESOT where all the necessary conditions specified in the legislation are complied with.
All the ESOTs approved by the Revenue Commissioners to date work in conjunction with an Approved Profit Sharing Scheme (APSS) under which eligible employees may receive shares free of income tax. The legislation governing approved profit sharing schemes is contained in Chapter 1 of Part 17 and Schedule 11 to the Taxes Consolidation Act 1997. As in the case of an ESOT, the Revenue Commissioners will only approve an APSS where all the necessary conditions specified in the legislation are complied with.
Universal Social Charge (USC) was introduced with effect from 1 January 2011 and is charged at the time shares are appropriated (or allocated) to eligible employees, i.e. the date they are transferred into the APSS either directly by the company or from the ESOT.
However, where the shares had already been held in a Revenue approved ESOT prior to 1 January 2011, their subsequent appropriation through the APSS to eligible employees does not attract a USC charge.
The treatment of the USC charge applies equally in the case of private and semi-State companies.