Employment and Investment Incentive

The scheme allows an individual investor to obtain income tax relief on investments up to a maximum of €150,000 per annum in each tax year up to 2020.Untitled Relief is initially available to an individual at up to 30%. Up to a further 11% if investment is made before 1 January 2015, or up to a further 10% if investment is made on or after 1 January 2015, will be available where it has been proven that employment levels have increased at the company at the end of a period of 3 years from investment or where evidence is provided that the company used the capital raised for expenditure on research and development. An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €150,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2020, subject to the normal limit of €150,000 on the amount of investment that can be relieved in any one year.

This scheme is available to the majority of small and medium sized trading companies. However, the following trading activities will not be eligible for the scheme:

  • Adventures or concerns in the nature of trade
  • Dealing in commodities or futures in shares, securities or other financial assets
  • Financing activities
  • Professional service companies
  • Dealing in or developing land
  • Forestry
  • Operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as a hotel, guest house, self catering accommodation or comparable establishment. (Unless they qualify as Tourist Traffic Undertakings and have prior approval from Fáilte Ireland).
  • Operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home
  • Operations carried on in the coal industry or in the steel and shipbuilding sectors
  • The production of a film (within the meaning of section 481)

The company must be unquoted, i.e. it must not be listed on the official list of a stock exchange or on an unlisted securities market of a stock exchange. Companies listed on the Enterprise Securities Market or whose shares are traded in an over-the-counter market will however qualify.

Investors must purchase new ordinary share capital in the company. Shares must carry no preferential rights. Normally, the minimum investment by an individual in any one company which qualifies is €250. The maximum investment by all investors in any one company or group of companies is €10,000,000 subject to a maximum of €2,500,000 in any one twelve month period. There must be no condition which would eliminate the risk to the investor.

Relief can be claimed immediately in the case of established companies or after four months' trading in the case of new companies. If the company is not trading at the time the shares are issued, relief cannot be claimed until the company:

  1. commences trading. It must however commence trading within two years of the share issue, or
  2. expends at least 30% of the funds raised under the scheme on research and development activities which are connected with and undertaken with a view to carrying on relevant trading activities.

Shares must be held and certain conditions satisfied in relation to the investor for a period of three years.

Details, further information and forms on the incentive, can be found at the Revenue Website.