Employment Investment Incentive (EII) for companies - qualification conditions, application resources and what companies and investors must do to avail of the scheme
What is the EII?
The Employment Investment Incentive is a tax relief that can be used by trading companies to attract equity-based risk finance from individuals.
What must companies do?
Qualifying companies that wish to raise finance under the Employment Investment Incentive must issue ordinary shares to the investor in respect of the amount invested. The company must use the money raised to carry on a qualifying trade. Invested funds cannot be used for debt repayment.
What must the investor do?
The investor can claim Income Tax relief on amounts invested, provided they keep the shares for at least four years. The relief is split into two tranches:
- 30/40 on receipt of an EII 3 certificate in the year of investment
- 10/40 on receipt of an EII 3A in the fourth year after the initial investment.
To qualify, companies must have less than 250 employees, an annual turnover of €50 million or less and a yearly balance sheet not exceeding €43 million. There are a number of additional detailed conditions that companies must meet to become a qualifying company. Revenue manuals give information on these conditions, the types of activities that qualify and events that can result in a claw back of the relief. Enterprise Ireland also provide details on these conditions along with further useful information on the EII scheme in their general information guide which can be accessed here.
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