31 Deputy Noel Ahern asked the Minister for Finance the position regarding the recent withdrawal from Eircom company of €40 million by the employees share ownership plan; if this was allowed tax free; if this loophole can now be closed off as the circumstances and purpose of original legislative provision for such withdrawals has since passed; and if he will make a statement on the matter. [46806/10]

For reasons of taxpayer confidentiality the Revenue Commissioners do not comment on or provide information on individual cases in relation to either businesses or personal taxpayers. However, by way of general information, the following is the position. The legislation governing an Employee Share Ownership Trust (ESOT) is contained in Section 519 of, and Schedule 12 to, the Taxes Consolidation Act 1997. A company must apply to the Revenue Commissioners if they wish to operate such an ESOT. The Revenue Commissioners will only approve the ESOT where all the necessary conditions specified in the legislation are complied with.

All the ESOTs approved by the Revenue Commissioners to date work in conjunction with an Approved Profit Sharing Scheme (APSS) under which eligible employees may receive shares free of income tax. The legislation governing approved profit sharing schemes is contained in Chapter 1 of Part 17 of, and Schedule 11 to, the Taxes Consolidation Act 1997. As in the case of an ESOT, the Revenue Commissioners will only approve an APSS where all the necessary conditions specified in the legislation are complied with.

Where the trustees of an approved ESOT transfer shares to the trustees of an APSS for distribution to eligible employees, the employees may receive shares free of income tax to the value of up to €12,700 per annum. To receive the shares free of income tax they must have been held for a period of not less than 3 years. The time the shares are held in the ESOT is included for the purpose of this three-year period.

In certain limited circumstances, and on a one off basis only, shares to the value of €38,100 may be received free of income tax. The same three-year retention period is required.

In its recent report, the Commission on Taxation reviewed the tax treatment of ESOT's and APSS's. The Commission recommended the retention of the tax relief for these schemes in view of the role they play in enhancing employees' interests in the competitiveness and performance of their employer, supporting economic activity and the modernisation and privatisation of State-controlled businesses.

Notwithstanding the above recommendation, the Commission on Taxation indicated that the benefit realised from APSS should be subject to PRSI, Income Levy and Health Levy charges. Provision for the introduction of these charges was made in the National Recovery Plan and in Budget 2011.