What is the KEEP scheme in Ireland?

KEEP (Key Employee Engagement Programme) is a Revenue scheme that allows SMEs (small and medium-sized enterprises) to grant share options to key employees on a tax-advantaged basis. When employees exercise the options and later sell the shares, they pay Capital Gains Tax (at 33%) rather than the much higher income tax, PRSI, and USC rates that normally apply to share options. This allows companies to attract and retain talent using equity without an immediate tax liability.

Who qualifies for KEEP share options as an employee?

To qualify, the employee must: work full-time for the qualifying company (at least 30 hours per week); be a director or employee (not a consultant or contractor); receive total remuneration from the company in the year of grant; the shares must be acquired from a qualifying company at market value at the time of grant or less.

What companies qualify for the KEEP scheme?

To issue KEEP options, a company must be: an unquoted SME (not listed on a stock exchange); incorporated in Ireland or in an EEA state; carry on a qualifying trade (not financial activities, professional services, or land development); have annual turnover below €250 million; meet certain asset and employee count criteria for SME classification.

What is the tax advantage of KEEP share options?

Without KEEP: when an employee exercises a standard share option, the gain (market value minus exercise price) is immediately subject to income tax (up to 40%), PRSI (4%), and USC — potentially a total tax burden of 52%+. Under KEEP: no tax at grant or exercise — tax only arises on the eventual sale of shares as Capital Gains Tax at 33%. This is a significant tax advantage for high-value equity grants.

What is the annual limit on KEEP options?

The maximum annual market value of options that can be granted to any one employee under KEEP is €100,000. The maximum lifetime limit per employee is €300,000. These limits apply to options granted, not exercised. Company-wide, KEEP options cannot exceed 100% of the company's share capital in any 3-year period.

How do I set up a KEEP scheme as an employer?

Engage a solicitor and tax adviser to draft the option plan rules and individual option agreements. Ensure the company qualifies as an SME in a qualifying trade. Notify Revenue of the scheme using Form KEEP1. Options should be granted at current market value (documented by a formal valuation). The employee must hold the shares for at least one year before selling to retain the CGT treatment.

Business & Tax · Employee Equity

KEEP Scheme Ireland 2026 — Key Employee Engagement Programme

Irish SMEs can use the KEEP scheme to grant share options to key employees with a major tax advantage: gains are taxed at Capital Gains Tax (33%) when shares are sold, rather than income tax rates of up to 52%. No tax at grant or exercise. Maximum €100,000 per employee per year.

Reading time: 5 minutesLast updated: June 24, 2026

KEEP SCHEME — AT A GLANCE

Tax at grant	None
Tax at exercise	None
Tax on eventual sale	Capital Gains Tax at 33% on gain
vs standard options	Standard options: 40%+ income tax + PRSI + USC at exercise
Annual limit per employee	€100,000 market value of options granted
Lifetime limit per employee	€300,000
Who can offer	Unquoted SMEs in qualifying trades
Minimum holding after exercise	1 year before selling (to retain CGT treatment)

Tax saving example

An employee receives a KEEP share option for shares worth €50,000 at exercise, with an exercise price of €10,000 — a gain of €40,000.

Tax treatment	Tax on €40,000 gain	Employee keeps
Standard share option (income tax)	€40,000 × 52% = €20,800	€19,200
KEEP option (CGT at sale)	€40,000 × 33% = €13,200	€26,800
Advantage of KEEP	€7,600 less tax	€7,600 more

What trades qualify?

KEEP qualifying trades broadly include: technology, manufacturing, retail, hospitality, engineering, and most commercial activities. Excluded sectors include: financial services and insurance; property development or dealing; professional services (legal, medical, accountancy) where the majority of activities involve personal expertise.

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Employee CGT annual exemption: The first €1,270 of capital gains per year is exempt from CGT (the annual personal exemption). For smaller KEEP gains, this further reduces the tax bill. The exemption applies to total gains across all assets, not just KEEP shares.

Information Accuracy — This guide has been independently researched and reviewed using official Irish government sources available on the publication date. Government schemes, payment rates, eligibility rules and legislation may change over time. Before making financial, legal or welfare decisions, always confirm the latest information directly with the relevant Irish authority.

Reviewed by

Vitor Alves

Founder of D’Emilia Accounting

Founder of D’Emilia Accounting, helping immigrants navigate Irish tax and benefits.

Last reviewed: June 24, 2026 · About this site

Frequently asked questions

Can a startup with no revenue yet use KEEP?

Yes, provided the company qualifies as an SME, is incorporated in Ireland or the EEA, and carries on (or is about to carry on) a qualifying trade. The company does not need to be profitable or generating revenue — KEEP is particularly designed for early-stage companies trying to attract talent before they can pay market salaries.

What happens if the company is acquired before the employee sells shares?

An acquisition (trade sale) typically triggers the exercise of options and a sale in a single transaction. CGT applies to the gain at the point of sale. The KEEP tax advantage is retained as long as the options were held for at least one year from grant. Many startup acquisitions are structured to allow employees to receive proceeds net of CGT.

Do employees have to pay anything for the options?

KEEP options must be granted at a price equal to or less than market value at the time of grant. Employees pay the exercise price when they choose to exercise (buy) the shares. If granted at market value, there is no immediate gain at exercise — any gain arises only when the share price has increased and the shares are later sold.

Does KEEP apply to directors?

Yes, as long as the director is also an employee (works full-time for the company). Pure non-executive directors without an employment relationship do not qualify.

Is there an employer filing obligation under KEEP?

Yes. Employers must notify Revenue on Form KEEP1 when a scheme is established. Annual returns for options granted, exercised, and lapsed must be filed by 31 March each year. Failure to notify Revenue does not void the scheme but may create compliance issues.

Can the same company use both KEEP and EIIS (Employment Investment Incentive Scheme)?

Yes. KEEP is for employees (share options). EIIS is for external investors (relief on investment). They are separate schemes with different qualifying conditions and different participants. A company can offer KEEP options to employees while simultaneously raising EIIS investment from outside investors.

Official sources

This page reflects KEEP scheme conditions and limits for 2026. Revenue criteria for qualifying companies and trades are subject to change — verify at revenue.ie before implementing.