Ireland has numerous funding and mentoring support schemes in place at national and local levels, cutting-edge technological infrastructure, a place at the gateway of the European Union, and an attractive tax system.In addition to these, there are various investment tax relief schemes designed to help businesses start-up in the Republic, and attract investment to grow their operations. Key among these, at a national level, are three tax relief schemes: the Employment Investment Incentive (EII), Start-Up Relief for Entrepreneurs (SURE), and the Start-Up Capital Incentive (SCI).
Employment Investment Incentive Scheme
The Employment Investment Incentive (EII) scheme allows individual investors to claim tax relief on equity investments in certain unquoted micro-businesses and SMEs, up to designated yearly limits.
Excluded activities include: dealing in shares or other financial instruments; other financial activities; dealing in or developing land, or occupying woodland; owning or operating care homes or residential homes; film production; and operations in the steel, coal or shipbuilding sectors.
The maximum amount of relief that can be claimed per year and the proportion and way in which it can be claimed by the individual varies according to when the investment was made.
From January 1, 2020, the upper limit for relief to be claimed by the investor per year of assessment is €250,000 (before this it was €150,000), unless an election is made at the time that the shares are issued to retain them for at least seven years. In such cases, relief can instead be claimed on investment of up to €500,000.
Start-Up Relief for Entrepreneurs (SURE)
Under the Start-Up Relief for Entrepreneurs (SURE) scheme, people leaving employment, or going from being unemployed to starting up their own company, can claim tax relief on tax paid in previous assessment years.
To be eligible to claim relief under the SURE scheme, the company must be undertaking qualifying trading activity. The following activities are specifically excluded: financial trading, the provision of professional services (whether medical, accounting/auditing or legal), the occupation of woodland, the running of hotels and guesthouses, film financing operations, and businesses in the coal, steel and shipbuilding sectors.
Additionally, the entrepreneur must be taking up full-time employment in their new company (either as a director or an employee), they must have received mainly PAYE income for the previous four years, and they must be investing in the new company via the purchase of shares that they intend to retain for at least four years.
The minimum permitted investment (per investor) under the SURE scheme is €250, and the maximum is €100,000 per assessment year, with relief claimable over a seven-year period.
Start-Up Capital Incentive
The Start-Up Capital Incentive (SCI) scheme is designed to help micro-enterprises to raise equity from family members of founders by granting them tax relief on their investment, with a €500,000 lifetime limit imposed on the equity financing that can be raised by the company.
In order to qualify, the start-up must be a new venture (not aligned with, or similar to, any businesses run by the shareholders).
COVID-19 Changes
It is worth noting in conclusion that the Revenue is aware that the COVID-19 pandemic may have impacted the ability of both companies and investors to meet the eligibility criteria for these relief schemes and that these rules have been loosened somewhat in order to help businesses qualify.
Updated guidance on these concessions can be found in Tax and Duty Manual Part 16-00-02, titled Relief for investment in corporate trades, which was updated by the Irish Revenue in April 2021.
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