41% Tax Savings Announced for SME Investors

November 25, 2011

John Lyons, Tax Partner, RSM Farrell Grant Sparks

A New Investment Scheme has been announced – Providing 41% Tax Savings for SME Investors

Today leading audit tax and advisory firm, RSM Farrell Grant Sparks announced the approval by the European Commission of a new Government investment scheme that will offer substantial tax relief to investors, assisting SMEs in raising funding.

Under the Employment and Investment Incentive Scheme (EIIS), an individual who invests in an SME can get tax savings of 30% on the investment in the 1st year and a further 11% 3 years later, if employment in the business increases.  The Scheme could create up to 2,400 jobs over the next two years.

Struggling businesses have been thrown a lifeline by the new Employment and Investment Incentive Scheme (EIIS), for which most trading businesses will qualify.  The Scheme is designed to be easy to avail of and suits small as well as larger companies.   An individual gets tax relief by purchasing new shares in the company and can invest from as little as €250 to a maximum of €150,000 in any tax year.  The Scheme will support existing jobs and will enable businesses to create new employment.

Commenting on the announcement, John Lyons, Tax Partner at the Longford office of RSM Farrell Grant Sparks said;
“Struggling businesses have been thrown a lifeline by this new scheme, the scheme is designed to be flexible and easy to operate, most trading businesses qualify for it. It offers substantial tax relief to investors.  We act for a large number of clients across the SME sector, restriction of bank and trade credit is a significant challenge for these businesses.  They need all the help they can get and this scheme will assist them in raising additional equity”.

The Employment and Investment Incentive Scheme (EIIS) is scheduled to end on 31 December 2013. It is hoped this date will be extended in order for individuals to learn about the benefits and make use of these reliefs effectively. The Scheme is designed to be flexible, allowing significant shareholders and family members to benefit from further investment in the company.  While it must be accepted that it is difficult to raise private equity at the moment, the EIIS Scheme will certainly be of great help in those efforts.

For further information please contact John Lyons in the Longford office of RSM Farrell Grant Sparks at 043 334 1900 or email john.lyons@rsmfgs.ie

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