The Key Employee Engagement Programme (KEEP): Employee Incentive Schemes Series
- Chelsey Heaney
- Apr 1
- 3 min read
Updated: 14 hours ago
Article 1 of 4
Introduction
As an employer, you are acutely aware of the employees who are critical to your organisation’s success — whether through their specialist skills, strategic vision, or the energy they bring to the business. Key staff are often central to the value, saleability, and long-term performance of a company. It is therefore essential that these individuals are appropriately rewarded for their contributions and incentivised to remain with and grow alongside the business.
Equity and share-based incentive schemes can be an effective way to recognise and retain key employees. The benefits of such arrangements include:
Increased retention and long-term commitment
Improved motivation and performance
Stronger alignment between employee and shareholder objectives
In this first article, we examine the Key Employee Engagement Programme (KEEP), a tax-efficient option scheme available to qualifying Irish companies.
Key Employee Engagement Programme (KEEP)
A commencement order signed on 30 December 2025 extended the sunset date of KEEP from 31 December 2025 to 31 December 2028, in line with the proposals set out in the Finance Act 2025.
Under KEEP, eligible companies may grant share options to employees at a predetermined price, enabling employees to acquire shares at a later date at the agreed price regardless of any uplift in value.
Share options granted under KEEP are exempt from income tax on exercise. Accordingly, any gain at the time of exercise is not taxed at that point. Instead, employees are liable to capital gains tax (CGT) when the shares are ultimately disposed of.
As a result of the extension, this preferential tax treatment continues to apply to qualifying options granted up to 31 December 2028.[1]
Eligibility Requirements
Unlike some other employee share incentives, eligibility for KEEP is contingent on both the company and the employee satisfying a range of statutory conditions[2]. These include limits on the total market value of share options that may be granted. At company level, the maximum value of options that may be granted depends on the size of the company and the duration of its participation in the scheme. In addition, the company must be an unquoted SME carrying on a qualifying trade on a commercial basis and must not be engaged in an excluded activity, such as certain financial or property-related businesses. At employee level, in order to be a “qualifying individual”, the individual must be a full-time employee/ director of the company and must devote a minimum of 30 hours per week working for the company.
Key Features
KEEP applies to share options granted at a fixed exercise price, which must be at least equal to the market value of the shares at the time of grant.
As the scheme is designed to benefit key employees, it does not apply to founders or individuals who hold, or control, more than 15% of the ordinary share capital of the company or group.
Companies are not required to obtain Revenue pre-clearance to operate KEEP; however, they must ensure strict compliance with the relevant legislative and Revenue requirements and satisfy ongoing reporting obligations when options are granted and exercised.
Further details on the eligibility requirements and associated tax considerations are set out in Revenue’s published guidelines on KEEP.
Conclusion
KEEP offers a valuable tax-efficient mechanism for Irish SMEs seeking to retain and incentivise key employees. However, it is subject to detailed legislative conditions and requires careful implementation to ensure compliance.
If you are considering setting up an employee incentive scheme or have been invited to participate in one and require legal support, please contact Chelsey Heaney or a member of the Power Law team.
In our next article, we examine broader Share Option Schemes, including unapproved options and Revenue-approved SAYE arrangements.
[1] S.I. No. 687/2025 - Finance Act 2025 (Section 19) (Commencement) Order 2025
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