Dáil Éireann Debate, Tuesday - 27 March 2018
186. Deputy Thomas P. Broughan asked the Minister for Finance if the concerns expressed at EU level regarding the employee incentive and investment scheme have now been resolved; and if he will make a statement on the matter. [13633/18]
Amharc ar fhreagraDuring the preparations for Finance Bill 2017 it came to light that the Employment and Investment Incentive (EII) was potentially not compliant with state aid rules (specifically Art. 21(3) of the General Block Exemption Regulations) and that it should be amended as a matter of urgency to bring it within state aid rules. The relevant provisions of the Taxes consolidation Act 1997 were amended by the Finance Act 2017 to correct this error.
The EII scheme previously allowed “connected persons” with up to an existing 30% shareholding to invest in a company and get EII relief. The amendment reduces this to 0%. The effect of the changes are to prevent investors from getting tax relief for investing in their own companies. This restriction does not apply if an individual and their relatives make their investments in the company while it is still at very initial stages before it commences any of its activities. I should also emphasise that the restriction does not apply where an individual is only connected with a company through a prior investment to which EII relief applied.
My Department has been in contact with the European Commission to advise it of the potential failure to comply with the General Block Exemption Regulations and the steps taken to correct this. The Commission is continuing to examine the issue.
The Deputy may also wish to note that, as indicated in my press statement of 3 November 2017, the EII scheme will be reviewed in the current year to ensure that it operates as a competitive, efficient and effective measure in accordance with State Aid rules and my Department's Tax Expenditure Guidelines. Arrangements in this regard are underway.
