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Proposed new tax framework and a plan to make Employee Ownership Trusts work in practice
The Irish ProShare Association (IPSA) has published a detailed proposal for introducing Employee Ownership Trusts (EOTs) in Ireland.
The submission, which was presented to the Department of Finance on 3 July 2026, identifies EOTs as a strong succession option for owners who do not want to sell their business to a trade buyer or private equity investor. With an EOT, a trust buys a controlling shareholding and holds it for the benefit of all current and future employees.
In the submission, IPSA recommends creating a clear statutory definition of an EOT, supported by additional conditions for trusts seeking tax relief. These would cover majority employee ownership, equal treatment of employees, trustee independence and the continued operation of the business.
The submission proposes several targeted tax measures:
- Exempt qualifying EOTs from the initial 6% and annual 1% Discretionary Trust Tax charges
- Extend Revised Entrepreneur Relief so that the 10% Capital Gains Tax rate applies to qualifying gains of up to €10m
- Allow CGT to be paid as sellers receive their money, since EOT purchases are commonly funded over six or seven years
- Allow EOT-owned companies to pay employees an annual income-tax-free bonus, suggested at between €3,000 and €5,000
- Ensure company payments used to fund the purchase are not reclassified as taxable distributions.
IPSA also addresses the risk of the reliefs being misused. Suggested safeguards include a clawback if the EOT sells the company shortly after the transfer, rules preventing former owners from taking back control, restrictions on trustee loans, and a requirement that employee bonuses do not disproportionately favour senior or higher-paid staff.
EOTs have proven very popular among SMEs in the UK since they were introduced in 2014. Similar schemes are already in operation in the US, Canada, Denmark, Slovenia and Australia.
Ireland already has the basic trust and company-law framework needed for a similar EOT scheme. However, the submission states that amendments to the Tax Acts and clear Revenue guidance would be required.
The submission also calls for a review of ownership rules in regulated sectors such as law, accountancy, healthcare and financial services, where current requirements could prevent a trust from holding a controlling stake.
IPSA cautions that legislation alone will not ensure adoption of EOTs. Government-backed information, experienced advisers, access to finance, and practical support for owners would be required for business owners considering a transition. The submission points to Scotland and Northern Ireland as examples where dedicated support has helped businesses understand and adopt employee ownership.
IPSA has drawn on the tax, legal, and governance expertise among its membership to prepare the submission, as well as experience from businesses and employees who have already worked with EOTs and a number of UK organisations involved in EOTs.
A central contribution comes from Alan Coleman, Founder and CEO of Wolfgang Digital, who explains why the company chose employee ownership despite the additional tax costs it faced in Ireland.
He also describes the positive results so far, including employee-led business improvements and an average 9% salary uplift through profit sharing. The submission includes further perspectives from former IPSA CEO Gill Brennan, an Irish employee who has served as an elected director of a UK EOT, and organisations and advisers including Employee Ownership Ireland, Scale Ireland, CGI Ireland, PwC, Forvis Mazars and EY.
This is more than a call for reform. IPSA has set out the tax changes, legal safeguards and practical support needed to give EOTs a real place among Ireland’s business succession options.
Marie Flynn, IPSA Former Chair and Head of the IPSA EOT Working Group, said: “This submission sets out a practical route to an EOT model that can be easily implemented and will work for Irish businesses and employees. EOTs give owners a way to realise the value from the business they’ve built while protecting their company, employees and legacy. By offering a genuine alternative to trade or private equity sales, EOTs keep jobs in local communities and help strengthen the Irish economy.
“We look forward to working with Government to give more Irish business owners the option of passing their company on to the people who helped build it.”
