The Employment and Investment Incentive Scheme (“EII Scheme”) is a tax relief incentive scheme which provides tax relief against total income for income tax purposes to Qualifying Investors for investments in certain Qualifying Companies. The EII Scheme offers one of the few remaining income tax reliefs and is one of the few sources of total income tax relief (which includes, for example, rental income, ARF distribution income).
Under the scheme, a taxpayer who puts money into an approved EII investment can reduce a substantial portion of their taxable income for the year in which the investment was made. The maximum investment allowed in respect of the years after 2019 is:
Tax relief on EIIS investments are not subject to the High Earners Restrictions. A married couple can each obtain individual relief on an investment of €250,000/€500,000, provided each spouse has sufficient taxable income.
In 2020 EIIS tax relief is available in full in the year of the investment. The investee company will issue shares to you for the amount you invest. You must hold those shares for at least 4 years or 7 years depending on the initial investment amount.
Tax relief on EIIS investment is one of the few sources of total income tax relief and it is not subject to the High Earners Restrictions. Therefore, it could be considered as an attractive investment option for:
What are the key risks of an EII Scheme?
What is my exit from the investment?
Exit is usually at the end of 4 years (or 7 years depending on the initial sum invested) and is pre-agreed with the investee company at the time of investment. This will be outlined in the investment terms.
Before investing in an EII scheme or fund, you should obtain independent tax advice, consider your personal circumstances and your attitude to investment risk. EII schemes or funds are suitable for those who don’t need to access the money invested for the investment period, who can avail of the income tax relief on the investment and who are aware that they may lose some or all of their investment and can afford to lose some or all of their investment.
We evaluate a large number of potential investee companies and EII funds each year and following a comprehensive due diligence and screening process carefully choose our final recommendations. Where you invest in a fund, the decision on which companies to invest in will lie with the fund manager and will be in line with their Investment Themes and Strategy set out in the investment brochure.
The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at November 2020. 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 marketing information has been provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives, financial position, risk attitude, liquidity needs, capital security needs and / or capacity for loss of any particular person. It should not be relied upon to make investment decisions.
Warning: If you invest in this product you may lose some or all of the money you invest.