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Employment and Investment Incentive and Seed Capital Scheme

The Act introduces a new Employment and Investment Incentive and Seed Capital Scheme to replace the existing Business Expansion Scheme (BES) and Seed Capital Scheme. The new schemes will only come into operation after the necessary approval from the European Commission has been received and will be subject to Commencement Order from the Minister of Finance. The current BES and SCS provisions will remain in place until such time as the Commencement Order gives effect to the new provisions.

The principal changes announced are as follows:

  • The qualifying trade limitations are largely removed and therefore the majority of small and medium sized trading companies should be able to avail of the schemes.
  • The certification requirements for the majority of qualifying companies will be simplified.
  • The annual and lifetime fundraising limits for companies will be increased as outlined in the table below:
Company Fundraising Limts -  Current Scheme - New Scheme 
     
Aggregate (lifetime) €2 million €10 million
12 Months €1.5 million €2.5 million
  • The minimum investment holding period for investors will be reduced from 5 years to 3 years.
  • Tax relief at an effective rate of 30% will be allowed in the year the investment is made and this amount will be subject to the high earners restriction.
  • Tax relief at a further effective rate of 11% of the amount subscribed for shares will be deferred until the tax year following the third anniversary of the investment. This however is subject to the investee company being able to demonstrate that it has increased employment or expenditure on research and development over the term of the investment.
  • The new schemes are scheduled to expire on 31 December 2013.

For further information please contact OSK Tax.