Dáil Éireann Debate, Tuesday - 15 October 2013
25. Deputy Brendan Griffin asked the Minister for Finance if he will consider the introduction of tax relief to stimulate new businesses and to protect existing businesses in rural areas in these difficult economic times; and if he will make a statement on the matter. [43122/13]
View answerIt is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions. However, I would draw the Deputy’s attention to some existing incentives in the tax code to encourage individuals to invest in schemes which can assist business.
The Employment and Investment Incentive (EII)
The 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.
The Seed Capital Scheme (SCS)
The SCS provides that an employee, who leaves employment and invests by means of shares in a qualifying new venture, may claim a refund of income tax paid in previous years. An unemployed person may also avail of this facility. The maximum investment that can be set against taxable income in any 1 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. By way of example, an individual who invests €10,000 under the scheme would be entitled to a refund of income tax already paid of €4,100 provided they had paid income tax at the higher rate in the relevant tax year.
