Employment and Investment Incentive Scheme Funds (EIIS )
What is the employment and investment incentive scheme?
The Employment and Investment Incentive Scheme (“EII Scheme”) is the reformed and revamped Business Expansion Scheme (“BES”). It is a tax relief incentive scheme which provides tax relief to eligible investors for investments in certain qualifying small and medium sized trading companies (“SMEs”).
The EII Scheme offers one of the few remaining tax reliefs and is one of the few sources of total income relief (which includes, for e.g. rental income and deposit income).
EII Scheme information for companies seeking investment
The Employment and Investment Incentive Scheme (“EII Scheme”) is the reformed and revamped Business Expansion Scheme (“BES”). It is a tax relief incentive scheme which provides tax relief to eligible Investors for investments in certain qualifying small and medium sized trading companies (“SMEs”)*.
How does it differ from BES?
The main differences for investee companies between the EII Scheme and the former BES are:
Wider scope of companies can now avail of funding under the EII Scheme – The new scheme is available to the majority of SMEs as opposed to the BES which was restricted to manufacturing and internationally traded services companies
Significantly increased company investment limits – a qualifying company can raise up to €10 million under the EII Scheme (previously €2 million).
EII Scheme funding enables qualifying companies to raise up to €10,000,000 (subject to a maximum of €2,500,000 in any one twelve month period) in equity funding. The scheme facilitates qualifying companies to secure funding at a competitive cost of finance and with no repayment until the end of the three year investment period.
Normal Funding Criteria
Funds or prospective Investors will seek to invest in companies with a capable management team and future growth potential. Certain key criteria which may be used by the Manager in assessing potential investee companies include:
- Strong and capable management team
- 3-5 year strong track record
- Future growth potential
- Low gearing levels
- Positive net asset value, and
- Prospect for realisation of investment after the 3 year EII Scheme period.
The criteria listed above are not intended to be exhaustive or an exclusive list.
Benefits to the company
In addition to the cashflow benefit, the EII Scheme may have the following advantages for your company:
- Fixed cost of finance for three years
- Existing shareholders retain control of the business
- The investment is equity not debt
- No capital repayment until 2016, and
- May trigger additional funding.
EII Scheme information for investors
The Employment and Investment Incentive Scheme (“EII Scheme”) is a tax relief incentive scheme which provides eligible investors with an opportunity to avail of income tax relief* for investments in certain qualifying small and medium sized companies (“SMEs”).
The EII Scheme offers one of the few remaining tax reliefs and is one of the few sources of total income relief (which includes, for example rental income and deposit income).
How does it differ from BES?
The main differences between the EII Scheme and the former BES are:
- Shorter investment term – 3 years compared to 5 years
- Opportunity for eligible investors to avail of tax relief of up to 41%* – 30% in the year of investment and a further 11% in the year following the 3 year investment period.
- Wider scope of companies can now avail of funding under the EII Scheme – The new scheme is available to the majority of SMEs as opposed to the BES which was restricted to manufacturing and internationally traded services companies.
- Significantly increased company investment limits – a qualifying company can raise up to €10 million under the EII Scheme (previously €2 million).