What Happens When I Invest My Money Using EIIS?
Investing money is a popular way to grow wealth and secure financial stability. There are various investment options available, each with its own benefits and risks. One such investment opportunity in Ireland is the Employment and Investment Incentive Scheme (EIIS). The EIIS is a government initiative designed to encourage investment in small and medium-sized enterprises (SMEs) by providing tax relief to investors. If you’re considering investing in EIIS, it’s essential to understand what happens when you invest your money in this scheme.
The Employment and Investment Incentive Scheme was introduced in 2011 and replaced the Business Expansion Scheme (BES). The primary goal of EIIS is to stimulate economic growth by supporting the development and expansion of Irish SMEs. It offers tax incentives to individuals who invest in qualifying companies, providing an opportunity for investors to support local businesses while potentially enjoying financial rewards.
Where does my money go?
When you invest your money in EIIS, you become a shareholder in a qualifying company. These companies are typically early-stage or growth-oriented enterprises that require additional capital to fund their expansion plans. They can operate in various sectors such as technology, manufacturing, services, and more. It’s important to note that investing in EIIS involves higher risk compared to traditional investments like stocks or bonds. Early-stage companies often face uncertainties and may not have a proven track record, increasing the risk of investment loss.
One of the primary benefits of investing in EIIS is the tax relief it offers. Investors can claim income tax relief on their investment of up to 40% of the amount invested, subject to certain limits. The maximum investment eligible for tax relief is €250,000 per year. This tax relief is claimed over a four-year period, with all of the investment available in the year of investment, subject to meeting specific conditions. It’s essential to consult with a tax advisor or financial professional to understand the tax implications and eligibility criteria.
In addition to the potential tax relief, investors in EIIS may also receive a return on their investment through dividends or capital gains. If the invested company performs well and achieves its growth objectives, the value of your shares may increase over time, resulting in capital gains when you sell your shares. Alternatively, the company may distribute profits to shareholders in the form of dividends. However, it’s important to note that not all investments are successful, and there is a risk of losing some or all of your investment capital.
Take note.
When you invest in EIIS, you not only support the growth of local businesses but also contribute to job creation and economic development. The scheme aims to foster entrepreneurship and innovation by providing much-needed funding to promising ventures that have the potential to contribute to the Irish economy.
Investing in EIIS also provides an opportunity to diversify your investment portfolio. Traditional investment options such as stocks and bonds may dominate many portfolios, but including alternative investments like EIIS can add a new dimension to your investment strategy. By allocating a portion of your funds to EIIS, you can spread your risk across different asset classes and potentially benefit from the unique growth potential offered by early-stage companies.
What is the difference between regular investment and EIIS?
Furthermore, investing in EIIS can be a rewarding and engaging experience. Unlike passive investments where you simply purchase shares and wait for returns, investing in EIIS allows you to actively participate in the growth and development of the invested company. As a shareholder, you may have the opportunity to attend annual general meetings, receive regular updates and progress reports, and even contribute your expertise and guidance if desired. This level of involvement can provide a sense of satisfaction and connection with the investment, knowing that you are directly supporting the success of a local business.
Another important aspect to consider when investing in EIIS is the potential social impact. By directing your investment towards small and medium-sized enterprises, you contribute to job creation, innovation, and the overall well-being of the local community. SMEs play a crucial role in driving economic growth, and your investment can help them thrive, expand, and provide employment opportunities to individuals. This social impact aspect adds an extra layer of fulfillment to your investment journey, knowing that your money is making a tangible difference in people’s lives.
It’s worth noting that investing in EIIS should be a long-term commitment. Early-stage companies often require time to develop their business strategies, execute plans, and achieve growth milestones. It may take several years before you see a return on your investment, and liquidity options can be limited compared to more established investments. Therefore, it’s essential to align your investment horizon and expectations, accordingly, considering EIIS as a medium to long-term investment strategy.
Conclusion
Investing in the Employment and Investment Incentive Scheme (EIIS) offers a unique opportunity to support local businesses, enjoy potential tax benefits, diversify your investment portfolio, and make a positive social impact. However, it’s important to thoroughly assess the risks, conduct proper due diligence, and seek professional advice to make informed investment decisions. By investing in EIIS, you not only have the potential to earn financial returns but also contribute to the growth and prosperity of the Irish economy.
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.
