Vahan Tchrakian

This Practice Note provides an introduction to the main types of share ownership models typically seen in Ireland.The share-based remuneration landscape in Ireland is not particularly advantageous from a tax perspective. The main benefit to employers in offering share-based remuneration is that, subject to certain conditions, an employer pay-related social insurance (PRSI) (ie social security) charge should not arise. The exemption from employer-PRSI on share-based remuneration typically applies where the shares granted are shares in the individual’s employing company or a company which ‘controls’ (for Irish tax purposes) the employing company.Employers have a payroll withholding obligation in respect of share awards. This obligation also applies to gains realised by employees or directors on the exercise, assignment or release of share options on or after 1 January 2024. Before that date, the employee or director was generally responsible for paying Relevant Tax on Share Options (RTSO) through self-assessment within 30 days of exercise.However, there are certain tax-advantaged share schemes, most notably certain schemes requiring Revenue approval, as well as restricted

IntroductionThe sale of an Irish company's business can be structured as either:•a sale of shares in the company by its shareholders (a share sale), or•a sale of assets owned by the company (an asset sale)In a share sale, the buyer acquires ownership of the company which owns and operates the target business. The company retains its assets (and liabilities) and continues to operate the business under the buyer's ownership. As a result, the buyer also assumes potential unknown (or understated) liabilities, such as pending litigation or unpaid taxes.In an asset sale, a buyer (or, as the case may be, seller) is able to pick and choose, with certain exceptions, which assets and liabilities and which parts of the target business it acquires (or, in the case of the seller, sells). Examples of assets may be as broad as the entire business and assets of the company, or a targeted and well-defined list of assets (such as real property, contracts or intellectual property).A benefit

It is market practice for a tax covenant (also known simply as a ‘tax deed’) to form part of the transaction documents in respect of an M&A deal where the target company is:•a private company incorporated in Ireland, or•a non-Irish incorporated private company where there is an Irish connection (ie where the buyer is Irish tax resident or the share purchase agreement (‘SPA’) is to be governed by Irish law)This Practice Note explains:•what is a tax deed•the allocation of tax liabilities•key procedural matters, and•the interaction of the tax deed with the SPA and tax warrantiesWhat is a tax deed?Contractual promiseThe tax deed is a contractual promise by the seller to pay to the buyer an amount equal to any tax liability of the target company or group covered by the tax deed. It is not a promise to pay the tax itself. Instead, it is a mechanism for shifting onto the seller the cost of such