The Employment and Investment Incentive Scheme (EIIS) is a tax relief initiative in Ireland designed to encourage individuals to invest in small and medium-sized enterprises (SMEs).  It includes, for example, rental income, Approved Retirement Fund (ARF) distribution income. The Tax incentive provides for tax relief of up to 40% of the investment made in certain corporate trades. The EIIS allows an individual investor to obtain income tax relief on investments for shares in certain companies up to certain limits each tax year. It offers attractive tax benefits to investors while providing much-needed funding for businesses. However, before you start participating in the investment, it is important to understand how to qualify for EIIS. In this article, we will explore the requirements for qualifying for EIIS and the steps you can take to benefit from this program.

1. Irish Taxpayer Status:

To qualify for EIIS, you must be an Irish taxpayer. This means you need to be resident in Ireland for tax purposes or liable to pay Irish tax on your worldwide income. However, in certain circumstances, a non-resident may qualify for EIIS if they have income charged to Irish tax.

2. Not Connected with the Company:

The investor cannot be, throughout the period of 2 years before and the period of 4 years after making the investment, connected with the company or any of its subsidiaries. Therefore, the investor must act as a third-party investor. For context, this includes situations where the individual or a relative of the individual;

• Is an employee or director of the company, and receiving any payment.
• Has voting rights or rights to assets.

3. Qualifying Expenditure:

For an investment to be eligible for EIIS, the funds raised must be used for qualifying expenditure. This includes expenditure on the creation or expansion of the company’s trade and the employment of new staff.

4. Minimum Investment:

To qualify for EIIS, investors must make a minimum investment of €250 and a maximum investment of €250,000 in any one year. The investment must be made directly into new ordinary shares issued by the company. Furthermore, it has to be held for a minimum of four years. A person can invest a maximum of €500,000 per year of assessment, if they meet the following conditions;

• if they leave their investment in the company for a period of 7 years. This must be stated at the time of the investment.
• if the investor “opts out” before the 7 years, the initial investment is withheld by the company.

5. Tax Relief:

Lastly, one of the primary benefits of participating in the EIIS is the tax relief available to investors. The relief is granted in the form of a deduction against your total income tax liability. The amount of relief is 40% of the amount invested, subject to the annual investment limit of €250,000. The relief is spread over four years, with all of the investment available in the year of investment.

It is crucial to consult with a qualified tax advisor or financial professional to understand the specific details and requirements of the EIIS scheme. They can provide personalised guidance based on your circumstances and help you navigate the investment process.

In conclusion, qualifying for the EIIS involves meeting specific criteria related to your taxpayer status, employment requirements, minimum investment, and the nature of the investment. By understanding these requirements and seeking professional advice, you can take advantage of this scheme to support SMEs in Ireland while benefiting from valuable tax relief.

Further Information

For further information, you can also contact us at Medpoint for a copy of our 2023 Prospectus on 01 901 0395 or by e-mail at eiis@medpoint.ie.

www.medpoint.ie/eiis/