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Irish Revenue Explains Changes To EIIS Tax Incentive

by Jason Gorringe,, London

19 October 2015

The Irish Revenue has published an e-brief that explains the changes to the Employment and Investment Incentive (EII) announced in the 2015 and 2016 Budgets.

The EII provides tax relief for investment in certain corporate trades. It allows an individual investor to obtain income tax relief on investments up to a maximum of EUR150,000 (USD170,576) a year in each tax year. The company must be unquoted, and investors must purchase new ordinary share capital in the company. Relief is initially available at up to 30 percent (the first tranche of relief). Up to a further 11 percent is available if the investment was made before January 1, 2015. Up to a further ten percent is available if investment is made on or after January 1, 2015. This second tranche is available if it has been proven that employment levels have increased at the company in the three years after the initial investment, or where the capital raised was spent on research and development.

The changes apply to share issues made on or after October 13, 2015.

Revenue's brief explains that, as a result of the reforms announced in the two most recent budgets, the amounts that can be raised by companies have increased from EUR2.5m to EUR5m in any 12-month period, and from EUR10m to EUR15m during the lifetime of the company. The minimum period for the holding of shares in an EII company, and for the company to remain a qualifying company for the EII, has been increased from three to four years.

Micro, small- and medium-sized enterprises at any stage of development may now qualify for the EII, regardless of where they are located in Ireland. Internationally Traded Financial Services are considered to be a qualifying trade, subject to certification by Enterprise Ireland. Nursing homes, including those that incorporate residential care units, are also considered to be a qualifying trade under the EII, and monies raised under the EII can be used to expand the capacity of nursing homes or residential care units.

The qualification criteria for the second tranche of relief has been changed from an increase in staff numbers and average wages, to an increase in staff numbers, by a minimum of one member of staff, and an increase in total wages by a minimum of the wages of one member of staff.

TAGS: Budgets | tax | investment | business | Ireland | budget | tax authority | small and medium-sized enterprises (SME) | tax rates | tax breaks | micro business | tax reform | trade | individual income tax | research and development | Employment | Invest

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