Dáil Éireann Debate, Thursday - 14 December 2017
83. Deputy Michael McGrath asked the Minister for Finance the number of entities availing of the EIIS; the number of which are private investors, SMEs and microenterprises; the average annual relief for each private investor, SME and microenterprise; the annual cost of the scheme; the number of persons employed as a direct result of the scheme; and if he will make a statement on the matter. [53742/17]
View answer84. Deputy Michael McGrath asked the Minister for Finance the number and value of EIIS claims made each month for the past 24 months; the number and value of claims left outstanding each month for the past 24 months; the average time taken to process each claim; the way in which the EU state aid rules have affected the number of claims under the EIIS; and if he will make a statement on the matter. [53743/17]
View answerI propose to take Questions Nos. 83 and 84 together.
The Employment and Investment Incentive (“EII”) applies to financing raised by micro, small and medium sized enterprises (being the company seeking to raise financing and all other associated companies). Where the enterprise and the investment meet certain conditions, it can raise financing from individual investors, who can claim tax relief in respect of the amount invested. Relief is granted in two tranches: the first portion of the relief (currently 30/40 and previously 31/41) is given at the time of investment while the second portion (currently 10/40 and previously 11/41) is given if, after 3 years, the company has increased employment or spent all of the money on qualifying research and development.
Details on EII from its introduction to 2016 are as follows:
|
Year |
Cost of EII €m |
Number of companies |
Number of investors |
Average investment per company € |
Average investment per investor € |
|
2012 |
4 |
78 |
352 |
172,100 |
35,700 |
|
2013 |
12.7 |
190 |
1,028 |
222,800 |
37,100 |
|
2014 |
18.8 |
239 |
1,395 |
261,900 |
37,900 |
|
2015 |
22.2 |
279 |
1,530 |
265,500 |
40,600 |
|
2016 |
32.5 |
261 |
1,768 |
415,900 |
49,700 |
|
TOTALS |
90.2 |
1,047 |
6,073 |
|
|
Details on the size of investments made under EII from its introduction to 2016 are as follows:The most recent complete figures for the EII scheme are for 2016. I am informed by Revenue that, in the year to the 30 November 2017, the scheme is seeing broadly the same levels of applications as 2016.
|
Amount Invested € |
2012 |
2013 |
2014 |
2015 |
2016 |
|
0-10,000 |
122 |
320 |
464 |
432 |
475 |
|
10,001-20,000 |
57 |
216 |
353 |
345 |
384 |
|
20,001-30,000 |
77 |
236 |
248 |
378 |
487 |
|
30,001-40,000 |
16 |
72 |
108 |
102 |
100 |
|
40,001-50,000 |
41 |
128 |
203 |
229 |
289 |
|
50,001-60,000 |
18 |
32 |
46 |
47 |
52 |
|
60,001-80,000 |
12 |
55 |
66 |
86 |
110 |
|
80,001-100,000 |
10 |
30 |
73 |
92 |
115 |
|
100,001-125,000 |
23 |
11 |
15 |
25 |
26 |
|
125,001-150,000 |
0 |
15 |
44 |
61 |
85 |
|
150,001-250,000 |
0 |
12 |
22 |
17 |
23 |
|
>250,000 |
0 |
15 |
12 |
13 |
40 |
|
TOTALS |
376 |
1,142 |
1,654 |
1,827 |
2,186 |
The changes made to EII by section 18 Finance Act 2015, to align the incentive with the Commission Regulation (EU) No 651/2014 of 17 June 2014, known as the General Block Exemption Regulation (“GBER”) increased the complexity of the scheme. In some respects, it broadened the category of companies who are eligible while in others it narrowed it; it introduced the requirement to consider all associated companies rather than the applicant company on a stand-alone basis; it introduced the requirement that relief under EII is only given for investments made on foot of a viable business plan and that follow-on investments are only eligible for relief where they were foreseen in the business plan first used to raise EII supported financing. This increase in complexity means that there are additional checks which must be carried out by Revenue prior to approving the relief.
The volume of claims (including claims for both the first and second tranches of relief and outline applications) dealt with in the last 24 months is:
EII 1 / EII 1A / EII outline applications received
|
|
2015 |
2016 |
2017 |
Total for three years. |
|
January |
N/A |
52 |
69 |
|
|
February |
N/A |
68 |
47 |
|
|
March |
N/A |
54 |
60 |
|
|
April |
N/A |
62 |
56 |
|
|
May |
N/A |
64 |
64 |
|
|
June |
N/A |
75 |
60 |
|
|
July |
N/A |
59 |
66 |
|
|
August |
N/A |
59 |
50 |
|
|
September |
N/A |
72 |
58 |
|
|
October |
N/A |
82 |
72 |
|
|
November |
N/A |
66 |
74 |
|
|
December |
41 |
46 |
- |
|
|
Totals |
41 |
759 |
676 |
1,476 |
|
Processed |
41 |
748 |
516 |
1,305 |
|
Rejected |
4 |
65 |
77 |
146 |
|
On hand at year end |
0 |
11 |
171 |
|
It is not possible to give an average time taken to issue a decision. Where a full application is received with all supporting documentation, a decision will issue more quickly than a case where additional information and clarifications must be sought. Equally, it takes less time to carry out the level of examination required in respect of a claim by a company with a simple corporate structure than a claim in respect of a complex corporate grouping. At present, in respect of the more complex cases, it can take up to three months for a reply to issue. A revised outline application form is now in use which should ensure that all applications received are accompanied by all supporting information required, and a revised EII claim form will be published, once it is translated into Irish. These two new forms should reduce the time taken to process each application.
I am also advised by Revenue that, as relief is granted at the taxpayer’s marginal rate of tax, the tax value of the amount invested depends on the circumstances of each the individual investor. As the tax relief is claimed in individual tax returns which are filed in October / November each year, it is not possible to calculate the cost per month.
I am further advised by Revenue that as the claims processed include a mixture of outline applications and actual claims, it is not possible to determine the value of these claims. While outline claims, for example, may include an indication of the amount of capital to be raised, this is only an indication and the actual value of the claim can only be determined when the actual claim is made. As such, Revenue does not record this information in relation to applications.
Companies in respect of which claims for relief under EII were first made in 2012 and 2013 that either increased employment or spent all of the funds raised on qualifying research and development are in a position to claim the balance of relief (the 11/41s in respect of those years). To date, Revenue have processed claims by 25 companies showing an additional 200 employments (with a mean increase of 8 employments for these companies) and by 19 companies who expended the full amount raised on qualifying research and development. These are preliminary figures as companies may still submit claims in respect of these periods.
Finally, as the Deputy will be aware from the recent debates during the passage of Finance Bill 2017, I indicated that a review of the EII scheme would be carried out in the course of 2018 to ensure, among other things, that the incentive continues to meet its objectives within the context of my Department's Guidelines on Tax Expenditures and EU state-aid rules.
