This question relates to the taxation treatment of patronage shares issued by Kerry Co-Op. I am advised by Revenue that there has been no change in policy in relation to this matter and the position adopted by Revenue is in accordance with long established taxation principles.
Deputies will be aware that Revenue has committed to facilitate the appeals process should a taxpayer raise an appeal to the independent Tax Appeal Commission in relation to a tax assessment relating to the patronage share issue.
In relation to share based remuneration schemes, in general, employees are subject to income tax on share issues where the employer issues such shares and charges the employee less than the market value for them. Income tax is due on the difference in the relevant values and is generally collected via the PAYE system, while income tax due on share options must be returned within 30 days of the exercise of such options. In certain cases the relevant shares may be subject to a clog, restricting the employee from selling such shares for a set period of time. However, notwithstanding this restriction on sale, any income tax due is payable at the time of the share award.
A more favourable treatment may apply under certain Revenue Approved share schemes, but such schemes are subject to a range of restrictions, and are used primarily by larger, quoted companies. Deputies will be aware that I announced my intention to introduce a new SME-focused, share-based remuneration incentive in Budget 2018. This is a complex undertaking, as a focused scheme of this nature will need to comply with State Aid regulations, and it is likely to require EU approval.
Therefore, in the years in which the patronage scheme was active, employees who received share-based remuneration in an SME company would in most cases have been subject to income tax on any value received. As such, there would not appear to be a policy rationale to legislate for different treatment specifically for patronage shares in those years. Furthermore, an amendment of the nature proposed by the Deputy would be retrospective, in that it would change the tax treatment of transactions occurring in the years 2011 to 2013. Retrospective changes undermine the certainty of the tax system for all taxpayers and can be subject to Constitutional challenge in the courts, and would not be appropriate in this instance.
