Michael Healy-Rae
Question:224. Deputy Michael Healy-Rae asked the Minister for Finance if he will address a matter (details supplied); and if he will make a statement on the matter. [7981/24]
View answerTuesday, 20 February 2024
Questions (224)
Written answers
Part 16 of the Taxes Consolidation Act 1997 (TCA 1997) provides relief for investment in corporate trades (Part 16 reliefs). The Part 16 reliefs are the Employment Investment Incentive (EII), Start-Up Relief for Entrepreneurs (SURE) and Start-Up Capital Incentive (SCI). The reliefs help provide SMEs and start-ups with alternative funding sources.
The Part 16 reliefs are State aid and come under the terms of Regulation (EU) No. 651/2014, known as the State Aid General Block Exemption Regulation, or GBER, which allows certain categories of State aid to be granted without prior notification by Member States to the European Commission.
A revision of the GBER was adopted by the European Commission on 1 July 2023 and Member States were granted a six-month transition period to implement necessary changes to domestic legislation to ensure relevant schemes continue to be compatible with the GBER. A number of changes were made to the Part 16 reliefs in Finance (No.2) Act 2023 to reflect the revised GBER.
One of the primary GBER revisions is the imposition of maximum rates of relief on qualifying investments depending on the basis upon which the company seeking investment is eligible for relief and on whether the investment is made directly or indirectly in an eligible undertaking. The rates range from 20 percent to 50 percent of the investment.
Where a company is engaged in an initial round of fundraising, Part 16 TCA 1997 now provides that the following rates of relief are available to investors from 1 January 2024:
• Where a company has not been operating in any market, where the investment (called “initial risk finance investment”) is made directly by an investor into the company, the rate of relief available will be 50 percent.
• Where a company has been operating in any market for less than 10 years following their incorporation or less than 7 years after their first commercial sale, where the initial risk finance investment is made directly by the investor, the rate of relief available will be 35 percent.
Revenue and officials in my Department are actively considering the meaning of ‘operating in any market’ in the context of the revised GBER. I am advised by Revenue that its published guidance on the Part 16 reliefs is being updated to reflect the changes to Part 16 TCA 1997 made in Finance (No. 2) Act 2023. It is the intention that guidance will be developed, together with examples, on the application of the differing rates of relief in the particular circumstances to which they apply, including the interpretation of ‘operating in any market’. Revenue will engage with members of the Tax Administration Liaison Committee (TALC) in respect of proposed updates to the guidance.