There are over 80 different government supports available to small businesses but many of them are not well known or understood. Each week in the SFA e-zine, we will profile a different support that could improve your business, giving you information and advice.
Employment and Investment Incentive Scheme (EIIS)
Tax relief for individuals of up to 40% on investment in small and medium size enterprises up to €150,000 per year to 2020. Relief is initially available at up to 30%; up to a further 10% can be claimed after four years if employment levels in the company have increased or where the company used the capital raised for R&D.
The maximum amount that can be raised by a company through the EIIS is €15m over the lifetime of the company and €5m in any 12 month period.
The EIIS replaced the Business Expansion Scheme (BES).
The aim of the scheme is to increase investment in SMEs by providing an incentive to investors. It focuses particularly on companies providing employment and/or engaging in R&D.
The EIIS is administered by the Revenue Commissioners. The first steps should be completed by the company – the investors can only claim the relief once they receive their certificate of relief through the company.
Before any claim is made, the business can apply for Outline Approval for an initial indication of whether they qualify as an EIIS company. This is done by filling in an EII Outline form and adjoining the company’s certificate of incorporation.
A claim can be made once the company is trading (or where the company is not yet trading, once the company has expended 30% of the funds raised on R&D activities with a view to trading). Claims can be emailed to firstname.lastname@example.org and should consist of:
- Form EII 1, completed by the Company Secretary
- A copy of the company’s Memorandum and Articles of Association
- Approval from Fáilte Ireland if the company is carrying on Tourist Traffic Undertakings
If approved, the company will receive certificates of relief for the individual investors. The investors should then claim the relief from their local tax office.
More information is available on the Revenue website and through accountants, stockbrokers and professional services firms.
If you are interested in applying, don’t forget:
- Micro, small and medium enterprises, whether start-ups or established businesses in any part of the State can qualify for the EIIS. Previous restrictions have been lifted.
- Nursing homes were brought into the scheme in Budget 2016. Internationally Traded Financial Services now also qualify, subject to certification by Enterprise Ireland.
- The company must be unquoted and investors must purchase new ordinary share capital in the company (which carry no preferential rights).
- Employees and directors may invest in their company subject to additional rules. Individuals can invest in companies owned or run by family members.
- The shares must be held for at least four years if the investor is to benefit from the full relief.
- A company that is wound up or dissolved during the four-year period will not be disqualified as long as it can be shown that it is for bona fide commercial reasons.