BES expiring, EIIS commencing

State aid approval has now been received from the European Commission for the new Employment and Investment Incentive Scheme, replacing the existing Business Expansion Scheme. This was originally proposed in the Finance Act 2011 earlier in the year, but was subject to commence under a Ministerial Order, pending approval.  Some changes will be included in its enactment in Finance Act 2012, but it is effective from 25 November 2011. The existing BES runs until 31 December 2011 (in respect of shares issued by that date), so that both schemes will run concurrently for a period of time.

The new scheme is subject to less restrictions than the old one, and the main changes are:

  • A reduced investment term (now 3 years, rather than 5).
  • The new scheme is open to most companies (there are some restrictions) whereas the BES was primarily for companies involved in manufacturing and internationally traded services.
  • Companies can raise total funding of €10 million under the EIIS (€2 million under BES)
  • Individual investors may receive total tax relief of 41%, with 30% in the year of investment, and a further 11% after 3 years if the company has met its obligations (related to job creation or research and development).

The Seed Capital Scheme remains for individuals establishing new business ventures. This provides for a refund of tax paid by an individual in the 6 years prior to establishing the new business, and the relief is limited to the amount of the investment in the new business.

Both of these schemes provide tax efficient methods to business to raise investments, either internally or externally. At Niall C Garvey & Co, we have extensive experience in operating these schemes. Please contact us for further information.

 

2 Comments


  1. Gerry
    Dec 10, 2011

    Hi Niall
    I plan to invest € 60,000 before 31-Deember 2011 in an approved EIIS.
    ; [ 30,000 ordinary shares at € 2 each ];

    Will I will receive 30 % € 18,000 tax refund [ paid out aprox May 2012 ]
    regardless of whether the combined income tax paid by my wife & I combibed was less that €18,ooo ?
    [ we are tax compliant. two directors in own business ]

    Thanks

    Gerry, Co Louth


    • niall
      Dec 14, 2011

      Gerry, as I am sure you will appreciate, we cannot provide specific advice on a website and I strongly suggest you consult your accountant before making this investment. Having said that, in general, tax relief is restricted to the amount of tax paid.

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