The employment and investment incentive, provided for in Part 16 of the Taxes Consolidation Act 1997, is an incentive whereby individuals who invest in certain companies obtain income tax relief on the amount invested. A number of conditions must be complied with. First, relief can only he granted to investors after ordinary shares have issued. Second, companies in which the investment can be made are those which carry on certain trading activities, are unquoted or have a balance sheet total of up to €43 million. Relief is only available where all of a company’s share capital is fully paid up from the date the shares were issued. There are additional rules which depend upon the age of the company. Companies which are less than seven years old and are raising EII for the first time have fewer requirements to meet than older companies or companies raising EII for a second or subsequent time.
Revenue has informed me that the increased complexity of the scheme, arising from changes in the Finance Acts of 2015 and 2017 to comply with state aid requirements means that each application takes longer to process than in previous years. The increased complexity also results in a large number of incomplete applications being made, which in turn increases the volume of correspondence dealt with by the processing team. In addition, there was an increase in the number of companies applying for relief.
During the passing of the Finance Act 2017, I announced a review of EII and the start-up relief for entrepreneurs scheme, to be completed in advance of this year's finance Bill. Among the matters to be addressed in the review is whether the incentives, as currently designed, provide a platform for the effective operation of the reliefs. The review is under way and the public consultation is now complete. I expect that proposals to address any shortcomings in the operation of the scheme will form part of the final analysis.