Employment & Investment Incentive (“EII”) scheme is one of the final remaining opportunities for individuals to claim Income Tax Relief at the Marginal Rate of 41%. While it provides Tax Relief for individual investors it also provides companies with an instant cash flow benefit. This investment scheme is designed to promote both job creation and investment in Small & Medium Size Businesses using investment capital.
EII gives opportunities to individuals to invest up to a maximum of €150,000 in exchange for shares in a particular Corporate Trade for a 3 year period. EII promotes a 3 year investment period which is evident from the 41% refund available being spread out between the start and the end of the holding period. The initial Tax Relief of 30% may be claimed in the year of investment once the shares are issued. The additional 11% benefit is only received by the investor if the company has met its requirements of increased employment or investment in Research and Development.
There is a claw-back of the 30% relief claimed by the investor if they sell their shares within the 3 year period or if the company does not continue to qualify as an EII company for the duration of the investment.
It is worth noting that Finance Act (No. 2) 2013 removed EII from the high earners restriction for a period of 3 years. As a result of this the scheme has become more attractive for high net worth individuals.
The following are the potential returns available based on various investment amounts, assuming an overall return of €1.00 for every €1.00 invested.
|Tax Saving 30% in 2014||3,000||15,000||45,000|
|Tax Saving 11% in 2017||1,100||5,500||16,500|
|Sale of Shares in 2017||10,000||50,000||150,000|
|Total Received from Investment||14,100||70,500||211,500|
|Net Gain on Investment||4,100||20,500||61,500|
If you would like to find out more please contact Quintas on 021 4641400.