Written answers

Tuesday, 9 November 2021

Department of Finance

Departmental Schemes

Photo of Aindrias MoynihanAindrias Moynihan (Cork North West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

253. To ask the Minister for Finance the plans that are in place for the expansion of the employment and investment incentive scheme; and if he will make a statement on the matter. [53168/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Employment Investment Incentive (EII) provides for tax relief of up to 40% in respect of investments made in certain corporate trades. The EII allows an individual investor to obtain Income Tax relief on investments for shares in certain companies up to a maximum of €150,000 per annum in each tax year for investments made up until 31 December 2019. For investments made after 31 December 2019, the maximum limit is raised to €250,000, or up to €500,000 in the case of those who invest for a minimum period of seven years.

Against the background of the Covid-19 pandemic, in my Budget 2021 address, I announced that an assessment would be made of how the EII Scheme could be enhanced. My officials initiated a public consultation at the end of 2020 which concluded with a number of interactive online sessions over two days at the end of March 2021.

Arising out of this consultation process, I am bringing forward a number of positive improvements to the scheme in Finance Bill 2021. As I indicated in my recent Budget address, I believe that the Employment Investment Incentive (EII) scheme has the potential to become a real driver of investment in early stage companies and high-potential start-ups. Aside from an extension of the scheme for a further three years, I propose to open up the scheme to a wider range of investment funds and my expectation is that this measure on its own will result in greater investment in early stage enterprises.

I also propose to allow a qualifying company repay, redeem or purchase share capital from an individual who has made investments in multiple years and where some of those investments are no longer within their compliance period but other EII investments are within the period, without the relief that individual may have received being reduced by the value redeemed by the qualifying company. As part of the proposed modification, the investor will be precluded from seeking further EII relief in that company for a five-year period following such a redemption. In addition, I propose that a qualifying company may not avail of the capital redemption window unless it has sufficient reserves above any EII investments to enable it to redeem the share issue. In effect, it would not be able to use capital raised which would qualify for relief to redeem that very capital.

I am also removing the 30 per cent expenditure rule which is unduly restrictive in the context of the self-assessment principles that now apply to the relief.

Besides the above positive changes, a number of necessary technical amendments are being brought forward to ensure that the measure operates in line with the policy intention for it.

The EII scheme will continue to be kept under review to seek to ensure that it can reach its full potential as a support to start-up firms.

Comments

No comments

Log in or join to post a public comment.