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SAYE Scheme: Revenue Approved Profit Sharing Schemes

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A Save as You Earn (SAYE) scheme is one of two types of approved employee ownership schemes that are accepted by the Revenue commissioners.

A SAYE scheme is designed to help employees exercise options in company shares without having to borrow money. Employees who buy shares under a SAYE are more inclined to hold onto their company shares, rather than disposing of them quickly which is more frequent in cases when they borrow money to purchase them.


How does it work?

When a SAYE scheme is put in place:

  • An employee agrees to save a fixed amount of their net pay for a predetermined period of time. These contributions are held in a qualified savings account.
  • At the same time, the company grants the employee options based on the amount the participant has agreed to save.

At the end of this period, the employee has the choice to:

  1. Use the proceeds of their savings contract to buy some, or all of the shares OR
  2. Decide to not exercise their options to purchase shares, and have their savings returned as a lump sum.


The benefits for employees

As with any share option scheme, the benefit to the employee is that they only have to pay the option price for the shares, even if the share price has increased.

There is no income tax on any gain arising on the exercise of a SAYE option. However, the gain will be liable to employee PRSI and USC (universal social charge)

If the market price is lower than the option price offered to the employee, they can just take back possession of their savings free of income tax, PRSI and the USC.


How are shares allocated?

The number of shares granted under the option will depend on the amount a participant elects to invest, and the option price. Under the legislation governing SAYE schemes, a participant can save a maximum of €500 per month and a minimum of €12 per month. The total expected savings at the end of the savings period is divided by the option price, to give the number of options granted.

In order to satisfy the shares under option, a company can issue new shares, acquire shares on the market, or establish a company or trust to hold the shares for the purpose of the Scheme. There are legal, financial and tax issues where shares are acquired by purchase by the company, subsidiary or by a trust.

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As an Irish company, we have a unique understanding of the Employee Share ownership environment, and how to help you design and deliver an approved profit-sharing scheme that meets your objectives. Book a demo to see our product in action.

Please Note: This publication contains general information only and Global Shares is not, through this article, issuing any advice, be it legal, financial, tax-related, business-related, professional or other. The Global Shares Academy is not a substitute for professional advice and should not be used as such. Global Shares does not assume any liability for reliance on the information provided herein.

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