EIIS is a tax relief incentive scheme that allows individuals deduct a portion of the cost of their investment in a qualifying company against their income tax liability. An individual with a taxable income liability in the year an EIIS investment is made can obtain tax relief in respect of PAYE earnings, rental income and ARF distribution income.
EIIS has become an attractive alternative investment class in recent years. EIIS offers investors an opportunity to invest in high growth potential Irish businesses as part of a larger overall portfolio with the benefit of providing an element of tax relief that can be offset against their investment.
EIIS investment is suitable for individuals who have an annual income tax liability and who do not need access to their investment for a minimum period of four years.
A question that frequently arises – “is an EIIS investment capital guaranteed?” The answer is no. An investor is acquiring ordinary equity in the investee company and the value of the company may rise or fall subject to its performance over the term of the investment.
However, the benefit of the EIIS structure is that an investor can offset up to 40% of the cost associated with their investment by virtue of being able to claim this back in tax relief.
EIIS allows an individual investor to obtain income tax relief on investments up to a maximum of €150,000 in any one tax year.
The total tax relief available to an investor is 40%. However, this is obtained in two tranches over a four-year period.
An initial 30% relief is obtained for the year the investment was made, ie for an investment made in 2016 the investor will get relief of 30% in their 2016 tax return. The remaining 10% relief is obtained after year three of the investment, ie for an investment made in 2016 the investor will get the final 10% relief in their 2019 tax return. The final 10% relief is subject to the investee company meeting certain criteria around employment or development.Cantor Fitzgerald has raised in excess of €26m in EIIS funding for eight separate companies across a range of sectors, including renewable energy, food and beverage.
Richard Power is a director with Cantor Fitzgerald Ireland
EIIS is a tax relief incentive scheme that allows individuals deduct a portion of the cost of their investment in a qualifying company against their income tax liability. An individual with a taxable income liability in the year an EIIS investment is made can obtain tax relief in respect of PAYE earnings, rental income and ARF distribution income.
EIIS has become an attractive alternative investment class in recent years. EIIS offers investors an opportunity to invest in high growth potential Irish businesses as part of a larger overall portfolio with the benefit of providing an element of tax relief that can be offset against their investment.
EIIS investment is suitable for individuals who have an annual income tax liability and who do not need access to their investment for a minimum period of four years.
A question that frequently arises – “is an EIIS investment capital guaranteed?” The answer is no. An investor is acquiring ordinary equity in the investee company and the value of the company may rise or fall subject to its performance over the term of the investment.
However, the benefit of the EIIS structure is that an investor can offset up to 40% of the cost associated with their investment by virtue of being able to claim this back in tax relief.
EIIS allows an individual investor to obtain income tax relief on investments up to a maximum of €150,000 in any one tax year.
The total tax relief available to an investor is 40%. However, this is obtained in two tranches over a four-year period.
An initial 30% relief is obtained for the year the investment was made, ie for an investment made in 2016 the investor will get relief of 30% in their 2016 tax return. The remaining 10% relief is obtained after year three of the investment, ie for an investment made in 2016 the investor will get the final 10% relief in their 2019 tax return. The final 10% relief is subject to the investee company meeting certain criteria around employment or development.Cantor Fitzgerald has raised in excess of €26m in EIIS funding for eight separate companies across a range of sectors, including renewable energy, food and beverage.
Richard Power is a director with Cantor Fitzgerald Ireland
SHARING OPTIONS