EIIS (Employment & Investment Incentive Scheme)

EIIS (Employment & Investment Incentive Scheme)

The EIIS (Employment & Investment Incentive Scheme) replaced the BES since November 2011.

This scheme is open to a much wider range of companies than applied to BES and is one of the only total income tax reliefs available.

For these reasons it should be considered by companies seeking to raise finance for investment and growth.

The main conditions of the EIIS are as follows:

  • There is the potential for individuals to claim tax relief of 41%.
  • There is an initial tax relief of 30%, with a further 11% possible after a 3 year period. 
  • The conditions for the 11% relate to an increase in employee numbers and that average salaries are not reduced or that there is an increase in Research & Development expenditure.
  • The maximum individual investment is €150,000 per annum.
  • The limit, which can be raised over the lifetime of a company, is €10m with a limit in any one year of €2.5m. 
  • The companies which can avail of the investment and relief is much wider than what was allowable under BES. 
  • The company must be resident in the State.
  • The investment is for a 3 year period, rather than BES which was for 5 years.

The closing date for the relief is 31st December 2013, although this expected to be extended.

When the shares are bought back from the company they must be bought back at market value. 

An example of an investor return is as follows:                                           

                                         2012                  2013                  2014                 2015

                                            €                        €                        €                       €

Invest                              10,000                      -                         -                  10,000

Less tax relief                   3,000                      -                         -                    1,100

Return 10%                                -                      -                         -                  1,000

                                        ______              _____                _____               ______

Net Investment                  7,000                      -                         -                 12,100

                                        ______              _____                _____               ______

In this instance the net gain is €5,100 or a return on investment of 20% per annum.

With regard to the company, an example as to the cost of the funds raised:

                                        2012                  2013                  2014                2015

                                           €                        €                        €                      €

Raised                         1,000,000                      -                         -             1,000,000

Costs                                50,000             10,000               10,000                 10,000

10% return                                 -                      -                         -                100,000

                                    ________            ______              ______           _________

Net Received                 950,000             10,000               10,000             1,110,000 

                                    ________            ______              ______           _________

Cost of funds                                                                                                      6%

For further information or to discuss how this may be an option for raising funds for your company please contact Mark Butler.

 

 

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