Oireachtas Joint and Select Committees
Wednesday, 8 November 2017
Select Committee on Finance, Public Expenditure and Reform, and Taoiseach
Finance Bill 2017: Committee Stage (Resumed)
10:00 am
Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source
I move amendment No. 18:
"Amendment of Part 16 of Principal Act (income tax relief for investment in corporate trades - employment and investment incentive and seed capital scheme)15. (1) Section 488 of the Principal Act is amended, in the definition of "associate", by deleting ", except that the reference in paragraph (b) of that subsection to any relative of a participator shall be excluded from such meaning".(2) Section 492 of the Principal Act is amended—(a) in subsection (4)—(3) This section shall have effect as respects shares issued on or after 2 November 2017.".(i) by substituting "if the individual, or an associate of the individual," for "if he or she", and(b) in subsection (6)(a)—
(ii) by substituting "to acquire any of" for "to acquire more than 30 per cent of",(i) by substituting "if the individual, or an associate of the individual," for "if he or she", and(c) by substituting the following subsection for subsection (8):
(ii) by substituting "to receive any of" for "to receive more than 30 per cent of", and"(8) For the purposes of subsections (4) and (6)(a), no account shall be
taken of—(a) shares in the company concerned which are held by the individual
concerned where—(i) that individual was entitled to relief under this Part in respect of the acquisition of those shares, and(b) shares subscribed for upon the formation of the company concerned where—
(ii) that individual, or a person connected with that individual, does not at any time in the specified period control (within the meaning of section 432) the company concerned, or(i) the company has issued no shares other than those subscribed for on formation, and
(ii) the company has not yet commenced carrying on, or made preparations for the carrying on of, any trade or business.".
The employment and investment incentive, EII, was introduced by the Finance Acts 2011 and 2012. It is an investor-based tax relief under which an investor can obtain tax relief for investing in certain early phase companies. On advice from the Attorney General, I am proposing to make a number of amendments to the incentive. These amendments are necessary to ensure that EII is compatible with the General Block Exemption Regulation, GBER. Under GBER, countries cannot give aid to individuals to invest in a company of which they are already a shareholder. The GBER requirement has applied since October 2015.
The amendments I am proposing provides that a person who has a shareholding in a company, or whose relative has a shareholding in a company, may, from 2 November 2017, no longer claim relief under EII for an investment in that company. This restriction will not apply if an individual and his or her relatives make their investments in the company while it is still at very initial stages before it commences any of its activities. I should also emphasise that this restriction will not apply where an individual is only connected with a company through a prior investment to which EII relief applied. Some €30 million in relief is provided to investors under the scheme each year. The value of relief affected by this change was in the order of €6 million to €10 million per annum. I commend this amendment.
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