Irish BES Tax Relief Available Until The End Of January

by Carla Johnson, Investors Offshore, London

21 January 2002

Irish investors seeking to reduce their 2001 tax liabilities have until 31st January to invest in a Business Expansion Scheme (BES) fund. The BES was set up to help developing companies attract funds by offering tax relief to potential investors; investments must be left in place for five years or the tax relief can be clawed back.

In a normal tax year the maximum BES investment for an individual is Euros31,750; but in 2001, a shortened tax year to bring the Irish financial year into line with the eurozone standard, the maximum is Euros23,490. Tax relief is given at the investor's highest marginal rate of tax. Investors can either claim the tax relief for the 2001 tax year - giving them an immediate lump-sum refund payment from the Revenue - or in the current tax year.

It's risky to invest directly in a single company under BES, although possible, and most investors choose to investing through a BES fund which can spread risk across a number of developing companies. Investors pay fees and charges to the fund promoter.

One such fund is the 2002 Davy BES Fund, set up by Davy Stockbrokers, in association with BDO Simpson Xavier. The Fund has a fundraising goal of Euros5 million and is the 10th such fund to be introduced by this partnership.

The 2002 Davy BES Fund will invest in a portfolio of qualifying companies across a range of industrial sectors. Suitable companies for this fund include traditional manufacturing, food manufacturing/processing, software development and electronics.

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