Revenue Note for Guidance
Section 489 provides for relief under the Employment and Investment Incentive Scheme to an individual who subscribes for eligible shares in a qualifying company, where the share capital raised will be used by the qualifying company-
Relief in respect of thirty fortieths (or 75%) of the amount subscribed by an individual will be given in the year of assessment in which the shares are issued once-
Relief in respect of ten fortieths (or 25%) of the amount subscribed by an individual will be given in the fourth year following the issue of the shares provided—
This section shall only apply where the eligible shares are issued on or before 31 December 2020.
As this relief is included in Part 1 to the table in section 458, the general provisions relating to personal allowances/reliefs contained in sections 458 to 460 apply for the purposes of relief under this Part. These provisions relate primarily to the need to make a claim for relief and submit a return of income.
(1) The relief is available where —
The use of the money will contribute to the creation or maintenance of employment in the company.
(2) Subject to being an investment in a designated fund the relief is given as follows:
subject to satisfying the requirements of subsection (10) by means of a deduction equal to ten fortieths of the amount subscribed for eligible shares from the individual’s total income in the year of assessment following the date on which the relevant period ends.
(3) Where a EII investment is made through a fund designated by the Revenue Commissioners under section 506 and the shares in respect of which the investment are made are issued in the year of assessment following the year in which the investment is made in the fund, the investor may elect by notice in writing to the inspector to have the relief due given in the year of assessment in which the investment is made rather than in the year in which the shares are issued.
(3A) Where an investment through a fund was made in the period from 1 January 2014 to 31 December 2014 and the fund invests in shares in the month of January 2016, then, notwithstanding subsection (3), relief will be available either in the 2014 or 2016 year of assessment.
(b) If the company is not carrying on qualifying trading activities at the time the shares are issued, the relief is not allowed unless the company —
(5) The relief is given once all the conditions for the relief have been satisfied.
(6) Relief will be withdrawn where an event occurs within the appropriate relevant period which results in the claimant not being entitled to relief.
(7) Where a company carries on a qualifying trade for a period which is less that the stipulated 4 month period required by subsection (4)(a), relief is not to be denied where it can be shown that the company was wound up or dissolved for genuine commercial reasons and not as part of a scheme or arrangement the main purpose, or one of the main purposes, of which was the avoidance of tax.
(8) Subject to section 504 (which deals with capital gains tax on the disposal of shares) any relief granted is not taken into account in calculating any future capital gains tax which may arise on the disposal of shares.
(9) “distribution” has the same meaning as in the Corporation Tax Acts.
Relief is denied in respect of amounts subscribed for shares in a company where the shareholder or a person connected with the shareholder is either —
A shareholder is assured of recovering capital invested or of receiving a dividend where by virtue of an agreement, arrangement or understanding it could reasonably be considered that the risk element attaching to the investment is removed.
(10) Relief will not be available by virtue of subsection (2)(b) unless in relation to a qualifying company –
(11) A company carrying on green energy activities shall be deemed to have commenced relevant trading activities when it has made an application for a grid connection agreement
(12) The Revenue Commissioners may require the qualifying company to provide evidence as they consider necessary and may consult with such persons or body of persons as in their opinion may be of assistance to them, to enable them to verify that the conditions necessary for the claiming and granting of relief have been satisfied
(13) Relief is only available in respect of shares issued on or before 31 December 2020.
Relevant Date: Finance Act 2018