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Employment Investment Incentive Scheme

Dáil Éireann Debate, Tuesday - 29 May 2018

Tuesday, 29 May 2018

Ceisteanna (200)

Peter Burke

Ceist:

200. Deputy Peter Burke asked the Minister for Finance the timeframe for small business to be approved by the Revenue Commissioners for the employment and investment incentive, EII, scheme; if an application for a company (details supplied) in County Longford can be expedited; and if he will make a statement on the matter. [23595/18]

Amharc ar fhreagra

Freagraí scríofa

The Employment and Investment Incentive (“EII”) is a tax incentive whereby individuals who invest in certain qualifying companies obtain tax relief on the amount invested.

A qualifying company is one which:

- is an unquoted SME, meaning it has less than 250 employees and has an annual turnover of up to €50 million or an annual balance sheet total of up to €43 million;

- carries on certain trading activities or Research and Development activities;

- when its first EII investment is raised, the company (including any companies under the control of the same people) has been trading for less than 7 years or, if the company has been trading for more than 7 years, the EII investment is required to enter a new market and the amount of the EII investment required is greater than 50% of the company’s average annual turnover for the preceding  5 years; and

- foresaw any second or subsequent follow-on EII investments in the business plan the company used to raise its first EII investment.

All shares issued by the company must also be fully paid up, at all times.  Shares should not be issued in advance of the moneys actually being paid over to the company.

I am advised by Revenue that all claims are processed in the order received. The company to which the deputy refers applied for outline approval on 24 August 2017 and received the approval on 4 December 2017.  The company issued the shares in December 2017 and applied for relief on 1 May 2018.  Revenue further advise me that application for relief will be dealt with when it reaches correspondence of that date; and that there is currently a backlog of claims with 150 applications waiting to be finalised in advance of the company’s, with at least one request for additional information sent to 60% of these applicants.  Depending on the complexity of the application, applications for relief are generally taking between 3 and 6 months to finalise.

The entitlement to relief under EII is determined on the date the shares are issued to a qualifying investor, and they must be fully paid up shares on that date. As the company has already issued shares, any delay in approving that relief does not disadvantage the company with respect to raising funds. There is no tax deadline for investors fast approaching in respect of which approval for EII is a key factor.  Investors who made an investment will, if the relief is approved, be entitled to claim the relief when they file their tax return on 31 October 2018.

Finally, as the Deputy will be aware, I announced that a review of EII and Start-Up Relief for Entrepreneurs is to be carried out this year to ensure that they operate as competitive, efficient and effective measures in accordance with state aid rules and my department's tax expenditure guidelines. That review is now underway and is being conducted by Indecon Economic Consultants.  Amongst other matters, it will consider operational aspects of the scheme.

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