Irish business groups are urging the government to introduce tax reforms that would make it easier for small and medium-sized enterprises (SMEs) to transfer ownership to employees through Employee Ownership Trusts (EOTs). Advocates warn that without action, more Irish companies risk being sold to foreign investors, further concentrating wealth and decision-making outside the country.
An EOT allows employees to collectively own their workplace without each having to purchase shares. Instead, a trust acquires a controlling stake—typically at least 51%—on behalf of staff, with the purchase funded by company profits over time. This structure enables founders to exit fairly while ensuring the business remains rooted locally. A trustee board oversees governance, focusing on employee engagement, professional management, and profit-sharing.
The model has grown rapidly in the UK since tax reforms in 2014 granted capital gains tax relief to founders who sold to EOTs and allowed employees to receive up to £3,600 annually in tax-free bonuses. In the past decade, more than 1,800 UK companies—including Aardman Animation, creators of Wallace & Gromit—have transitioned to employee ownership. Research shows such firms often report higher productivity, stronger staff retention, and greater resilience during crises.
By contrast, Ireland’s tax system discourages employee buyouts. A 2024 Department of Finance review by consultants Indecon concluded that current rules penalise EOT-style structures compared to sales to multinational buyers. The Irish ProShare Association (IPSA) has proposed a two-stage reform: first, removing punitive discretionary trust taxes and clarifying anti-avoidance rules, then introducing incentives similar to the UK, including capital gains tax relief and modest employee bonuses.
“Every working day an Irish business is sold into foreign ownership,” said IPSA, arguing that the government should make it just as attractive to “sell in” to employees as to “sell out” abroad.
Despite the obstacles, Dublin-based Wolfgang Digital became the first Irish company to adopt an EOT in May 2024. Founder Alan Coleman said the move was driven by a belief that “a company of employee owners will outperform competitors,” even though the cost to sellers was higher than a conventional trade sale.
Advocates also highlight the disadvantage faced by Irish employees of UK-based EOT companies such as Seetec. While their UK colleagues receive tax-free annual bonuses, Irish staff must pay income tax and PRSI, making it more expensive for firms to reward workers equally across borders.
Proponents argue that encouraging employee ownership would diversify business ownership in Ireland, spread wealth more fairly, and strengthen local economies. “Ireland has excelled at attracting multinationals,” one industry expert noted, “but the next step is ensuring Irish businesses remain in Irish hands.”
With evidence from the UK, US, and Canada already demonstrating the benefits, campaigners say the government must now act on recommendations to modernise the tax code and make employee ownership a mainstream option for Irish SMEs.
