Dáil Éireann Debate, Wednesday - 7 November 2012
48. Deputy Eoghan Murphy asked the Minister for Finance if he will provide details of all investment schemes currently operated by the State which involve some form of tax relief or similar, whereby persons investing money in small and medium sized enterprises may receive a portion of that investment back through the tax system; the maximum amount under each scheme which can be invested and the maximum rate of relief. [48847/12]
View answerThe schemes providing for tax relief for investment in small and medium-sized enterprises are as follows.
The Employment and Investment Incentive (EII)
EII is a tax incentive that provides tax relief for investors who purchase new ordinary shares in small and certain medium-sized companies carrying on a trade, and who hold those shares for a minimum of three years. The incentive is designed to help companies to raise new risk capital to expand their activities. An individual investor can obtain income tax relief on investments up to a maximum of €150,000 per annum, subject to the high income individuals' restriction, in each tax year up to 2013. The maximum amount that may be raised by a company in any 12 month period is €2.5 million, subject to a lifetime limit of €10 million.
The maximum rate of tax relief available to an individual who subscribes for new ordinary shares is 30% of the amount invested. However, a further 11% tax relief may be available at the end of the holding period, provided the company concerned has either increased its number of employees or spent at least 30% of the investment raised on research and development.
Seed Capital Scheme (SCS)
The SCS is designed for individuals who are or were in employment, which was subject to PAYE. In general, it operates by providing that an eligible individual, who makes an investment in new ordinary shares in a qualifying company, may set off the amount of that investment against his or her taxable income in any of the previous 6 years, which will result in an overpayment of tax. The individual may then claim a refund of the tax overpaid. For example, an individual, who makes an investment of €10,000 in new ordinary shares and who sets off the amount of that investment against his or her taxable income for a year of assessment in which his or her marginal rate of tax was 41%, will be entitled to claim a tax refund of €4,100.
The maximum investment that can be set against taxable income in any single year of assessment is €100,000. This means that the maximum total investment that can be made under the Seed Capital Scheme is €600,000, as the individual may set up to €100,000 against the taxable income of each of the previous 6 years.
An eligible individual is an individual who takes up full-time employment with the company and holds at least 15% of the issued ordinary share capital for the required period, normally 3 years.
A qualifying company is a new company that carries on a trade except where the activities of that trade consist of: (a) activities which were previously carried on by another person and to which the company has succeeded, or (b) activities which were previously carried on as part of another person’s trade or profession.
Film Relief (Section 481)
The film relief scheme was introduced to promote the Irish film industry, by encouraging investment in Irish made films. Tax relief on the full amount of the investment is available to individual investors at their marginal rate of tax (41% for top rate taxpayers). Individual investors can invest up to €50,000 under the scheme in any year of assessment. The maximum amount which can be raised by a film production company, under the scheme is 80% of the total cost per production, subject to a maximum of €50,000,000.
