Invest in Your Own Company Tax Efficiently through EIIS

EIIS investments (formerly BES investments) are regularly advertised as a way that individuals can invest in trading companies and get a tax break on the investment. We recognise the tax savings that can be made from these investments, but are cautious of them because it is very often forgotten that they are first and foremost commercial investments that carry real risk – risk that the typical investor has relatively little control over.

EIIS can be looked at from another angle, however. At HLB Sheehan Quinn we have helped a number of clients with modest sized businesses which are carrying out a trading activity and are looking for capital and expansion to invest in their own businesses and to also claim the tax breaks that EIIS offers.

We outline some of the main criteria below. If you feel that it may apply to you or to someone you know, please get in touch.

The Relief

There is the potential for individuals to claim tax relief of 40%. There is an initial tax relief of 30%, with a further 10% possible after a 3 or 4 year period. The conditions for the 10% relate to an increase in employee numbers and that average salaries are not reduced or that there is an increase in Research & Development expenditure.

Restriction for Owners

Where an existing owner is investing in their company by EIIS, the total EIIS and share capital invested in the business cannot exceed €500,000.

How it Works

Investment is for a minimum 4 year period. When claiming EIIS, it is necessary to make a specific submission to Revenue. Revenue assess the application and if satisfied issue RICT certificates. These RICT certificates can be claimed to offset taxable income on your income tax return. It is important to ensure that you have sufficient income to offset the relief available, although any unused relief in a year can be carried forward to later years.

Recent Restrictions

EIIS has had to qualify for EU State Aid rules. A result of this is a restriction for new EIIS applications for companies that have been making sales for over 7 years and have not made a previous EIIS application.

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