Finance Bill 2019 Income tax incentives: enhancements and extensions

Oct 21, 2019

The Bill provides the legislation enhancing the operation of the Employment and Investment Incentive (EII) as announced by the Minister as part of Budget 2020 and the enhancements to the Key Employee Engagement Programme (KEEP); both of which will be of particular interest to SMEs.

EII

Section 25 provides for the amendments to the EII that were flagged by the Minister as part of Budget 2020. 

The main changes are to section 502 of the Taxes Consolidation Act 1997;

  • From 8 October 2019, full tax relief will be available in the year in respect of which the investment is made.
  • From 1 January 2020, the overall maximum investment relief amount allowed is increased from the current maximum of €150,000 to €250,000 and €500,000 depending on the length of the investment (4 years and 10 years respectively).
  • A qualifying investor is obliged to provide information that Revenue may require in order to verify details of the investment, through electronic means that Revenue makes available.

Section 508J of the Taxes Consolidation Act 1997 is also to be amended to provide for changes for designated investment funds. 

KEEP

Section 10 of the Bill amends section 128F of the Taxes Consolidation Act 1997 which provides for an exemption from income tax, USC and PRSI on any gain realised on the exercise of a qualifying share option under the KEEP.   The amendments, as announced on Budget Day extends the relief to certain group structures and to existing shares as well as those newly issued shares.  Conditions relating to qualifying employees are amended to allow for part-time/flexible working arrangements together with movement between qualifying companies within the group.  The amendments are subject to Commencement Order.