EU State Aid and EMI share options
The current EU State Aid approval expires on 6 April 2018. The government has, since last year, been following the process of applying to the European Commission for fresh approval but still awaits the Commission’s final response. This means that there will be a period between the lapse of the existing approval on 6 April and a decision by the EU Commission on a fresh approval.
HMRC considers that the State Aid approval applies to the granting of share options and therefore then share options granted up to and including 6 April 2018 won’t be affected by this lapse of the approval.
EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages presently afforded to option holders. Share options granted in that period as EMI share options may therefore fall to be treated as non-tax advantaged employment-related securities options.
Companies may wish to consider delaying the grant of employee share options intended to qualify as EMI share options until fresh EU State Aid approval has been given. The bulletin does not offer guidance as to how long the process may take although it includes assurance that the government is working hard to ensure this period is as short as possible.