EIIS – An Investment Opportunity with Tax Relief

EIIS – An Investment Opportunity with Tax Relief

The 12th BVP EII Fund

How EII Investment Tax Relief Works

EIIS is one of the few remaining sources of total income relief and an individual with an income tax liability in the year the EIIS investment is made can obtain tax relief from the following:

  • ARF Distribution Income
  • PAYE Earnings
  • Rental Income from property held personally.

Tax Relief
Tax relief given Year 1                   30%
Tax relief given Year 4                   10%
Return after Year 4                        Capital + Investor Return
The investor return is subject to Capital Gains Tax. For the purposes of computing an individual’s liability to CGT, the purchase price of the shares will be considered to be the cost before deduction of the tax relief.

Investor Case Study – ARF Distribution and EII Relief

John is 62 and has an annual distribution from his ARF of €120,000. He also receives significant investment income from rental properties, dividends and deposits that he holds personally. His investment income funds his lifestyle and he is concerned that he has a significant tax liability on his ARF distribution.
He invests €120,000 that is distributed from his ARF in qualifying EIIS investments in 2018 across a number of different companies. The tax he pays on his ARF distribution is all at the higher rate. He will receive the following tax relief:

Investment                                    €120,000
Tax relief given Year 1                      €36,000
Tax relief given Year 4                     €12,000
Return after Year 4                           €120,000 + investor return.

The Investment

The 12th BVP EII Fund provides investors access to a portfolio of growing companies while availing of up to 40% income tax relief for eligible investors.
BVP has shortlisted a number of companies for potential investment across various sectors including renewable energy generation, industrial solutions, and technology enabled transport solutions.

Why has Harvest Selected the 12th BVP EII Fund?

We have opted for a fund to avoid the concentration risk inherent in single company offerings. This fund also offers an uncapped return in contrast to many of the single company offerings where investor returns are limited to a cap which essentially means the investor takes on equity risk without the potential of equity return.

The Fund will aim to provide a  balanced portfolio focused on trading companies which are export-led. These companies promote sustainability with a particular emphasis on resource efficiency. The fund may also invest in renewable energy projects.
Investors will benefit from the tax relief provisions of the EII Scheme and the expected growth in the value of the shares from the date of investment to the date of realisation.

More information about the 12th BVP EII Fund can be found here.

You can read more about EIIS here and see how the tax relief works for investors here.
If you have any queries or would like to discuss how EIIS investment fits in to your overall financial planning, please contact your Private Client Advisor or email justask@harvestfinancial.ie.

Terry Devitt
Investment Director

The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at November 2018. Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should take such independent tax advice as you deem appropriate.

This information has been provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives or financial position or risk attitude or liquidity needs or capital security needs of a particular person. It should not be relied upon to make investment decisions.

Please note that the provision of this product or service does not require licensing, authorisation, or registration with the Central Bank of Ireland, and as a result, it is not covered by the Central Bank’s requirements designed to protect consumers or by a statutory compensation scheme.

Warning: If you invest in this product you may lose some or all of the money you invest.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in this product you will not have any access to your money for the length of the investment.