Minister Donohoe launches public consultation on Employment Investment Incentive

The Minister for Finance, Paschal Donohoe TD, has today (Wednesday) launched a public consultation on the Employment Investment Incentive (EII).

Public Consultation on the Employment Investment Incentive (EII)

Conscious that the pandemic has affected private investor confidence, and, in turn, the flow of available private equity investment into Irish companies, Minister Donohoe now invites interested parties to make submissions on how the EII might be further enhanced to take account of the changing business environment.

The Minister invites interested parties to make submissions on:

• Enhanced support for start-ups under EII.
• Broadening the eligible funds from Irrevocable Trusts/Designated Investment Funds by opening EII Funds to other relevant regulated fund structures.
• The relationship between the Renewable Energy Support Scheme (RESS) and EII.
• How EII might respond to the changing environment in which it operates.
• Any other matters considered relevant.

Minister Donohoe said today:

How to Respond

Submissions (in writing) should be made by email to: EIIconsultation@finance.gov.ie

When responding, please indicate whether you are a business, business professional, adviser, representative body or member of the public.

Submissions should be made no later than close of business on Friday, 12 February 2021.

The consultation process is open from today 23 December 2020 until 17:00 12 February 2021. Any submission received after this date may not be considered. All submissions received will be evaluated and a period of further direct interaction with stakeholders is planned for during Q1 2021.

ENDS

Notes for Editors

The Employment Investment Incentive (EII) is a tax incentive initiated in 2011 providing tax relief of up to 40% in respect of investments made in certain corporate trades. The main objective of EII is to provide SMEs and start-ups with an alternative risk-based source of funding and to support the creation and retention of employment in SMEs across the economy.

In 2018 and 2019, substantial changes were made to the scheme and associated legislation. These included the introduction of a self-assessment administration model; full income tax relief (40%) being provided in the year in which the investment is made and an increase in investment limits.

The main features of the incentive include:

• Tax relief of up to 40% is available on investments of up to €250,000 for investment over four years or €500,000 for investment over seven years.
• Companies may raise up to €5 million per annum, subject to a lifetime limit of €15 million.
• SMEs in all geographic areas of the country can qualify for the incentive.
• All small and medium companies less than seven years old in qualifying trades may use the incentive, as may certain older companies that are expanding into new products or geographic markets.

Interested parties are invited to make submissions regarding:

• Enhanced support for start-ups through EII.
• Broadening the eligible funds from Irrevocable Trusts/Designated Investment Funds by opening EII Funds to other relevant regulated fund structures.
• The relationship between the Renewable Energy Support Scheme (RESS) and EII.
• How EII might respond to the changing environment in which it operates.
• Any matters considered relevant.

In answering the consultation questions, respondents are asked to keep in mind the need to ensure that any proposals are consistent with EU State aid rules and the principles of the Department of Finance Tax Expenditure Guidelines , as follows:

• What objective does the tax expenditure aim to achieve?
• What market failure is being addressed?
• Is a tax expenditure the best approach to address the market failure?
• What economic impact is the tax expenditure likely to have?
• How much is it expected to cost?

Submissions will be subject to the provisions of the Freedom of Information Acts. The Department may receive requests for any or all information supplied as part of this process. Parties should also note that responses to the consultation may be published on the website of the Department of Finance in full.

Submissions (in writing) should be made by email to: EIIconsultation@finance.gov.ie

When responding, please indicate whether you are a business, business professional, adviser, representative body or member of the public.

The consultation period runs until 17:00, 12 February 2021.