IPSA believes that Employee Ownership Trusts (EOTs) could become a popular economic model for many Irish businesses.
An EOT is a trust that enables a company to become owned by its employees. It can be set up by a company’s existing owners, perhaps as part of their exit or succession planning strategy, or by founders starting a new business which they wish to be employee-owned.
EOTs have proven successful at encouraging more companies to become employee owned in the UK, where employee ownership grew by more than 300% in just six years following their introduction in 2014.
By allowing a business owners to sell their company to their employees, an EOT also secures the jobs of workers and ensures a that company remains in its community, compared to selling to a competitor, which can often result in a business being dismantled or relocated, with accompanying loss of jobs.
EOTs in Ireland are not currently a tax-efficient employee ownership tool for businesses or their employees. IPSA supports the introduction of legislation to bring EOTs here in line with the approach taken in the UK and a growing number of other countries, including Canada.
This was also the finding of the Review of the Taxation of Share-Based Remuneration, which was published by the Department of Finance in October 2024.
