S502 The relief

Definitions

“basic pay rate” means an employee’s emoluments per hour from the company in respect of an employment held with the company or a subsidiary of the company

“employment relevant number” means the total number of employees in receipt of emoluments from the qualifying company or a qualifying subsidiary, in relation to a subscription for eligible shares in the year of assessment in which the subsequent period ends.

“employment threshold number” means the total number of employees in receipt of emoluments from the qualifying company or a qualifying subsidiary, in the year of assessment before the year of assessment in which the subscription for eligible shares were made.

“qualifying employee”, in relation to a qualifying company or a qualifying subsidiary means an employee other that a director of the company who throughout his/her period of employment with that company is employed for at least 30 hours per week and that employment is capable of lasting at least 12 months.

“relevant amount” means total emoluments paid to qualifying employees as defined in “employment relevant number”, in relation to the subscription of shares, in the year of assessment in which the subsequent period ends.

“threshold amount” means the total emoluments paid by a qualifying company or a qualifying subsidiary to the qualifying employees referred to in the definition of employment threshold number, in the year of assessment before the year of assessment in which the subscription for eligible shares were made. If there was a reduction in the basic pay rate of the qualifying employees then the threshold amount shall be reduced accordingly.

“subsequent period” means the period beginning on the date on which the shares were issued and ending 3 years after that date.

Details

(2)(a) For shares issued on or before 8 October 2019 a qualifying investor who has made a qualifying investment in a qualifying company shall be entitled to relief for 30/40ths of that amount subscribed for shares, in the year of assessment in which the shares were issued. This will be granted as a deduction from his/her total income.

(2)(b) If the relevant conditions of subsection (4) are met, a qualifying investor shall be entitled to relief for the remaining 10/40ths of that amount. This will be granted as a deduction from his/her total income. It will be deducted from his/her total income for the year of assessment following the year of assessment in which the subsequent period ends.

(2A) For shares issued after 8 October 2019 a qualifying investor who has made a qualifying investment in a qualifying company shall be entitled to relief for the full amount subscribed for the shares, granted as a deduction from his/her total income for the year of assessment in which the shares are issued.

(3)(a) The maximum qualifying investment in which an individual can claim relief is €150,000 in the year of assessment 2019.

(3)(b) The maximum qualifying investment in which an individual can claim relief is €250,00 in the year of assessment 2020 and each year of assessment after that. This will be extended to a maximum qualifying investment of €500,000 but only where the investment is made in eligible shares where the investor will not dispose of those shares for a period of at least 7 years after the investment is made.

(3)(c) For all qualifying investments, the investor may be required to provide information to Revenue as and when it is required.

(4) For shares issued on or before 8 October 2019, in relation to the granting of the balancing 10/40ths of relief, it shall not be given in relation to a qualifying company and its qualifying subsidiaries unless the employment relevant number exceeds the employment threshold number by at least 1 qualifying employee and the relevant amount must exceed the threshold amount by at least the total emoluments of 1 qualifying employee in the year of assessment in which the subsequent period ends. Alternatively, the amount of expenditure on R&D+I incurred in the year of assessment where the subsequent period ends, exceeds the amount of expenditure on R&D+I incurred in the year of assessment prior to the year of assessment in which the subscription for the eligible shares was made.

(5) For investments made from 1 January 2022, in relation to relief granted under section 502(2A), an amount equal to ten fortieths of the relief granted will be deducted unless, in relation to a qualifying company and its qualifying subsidiaries, the employment relevant number exceeds the employment threshold number by at least 1 qualifying employee and the relevant amount exceeds the threshold amount by at least the total emoluments of 1 qualifying employee in the year of assessment in which the subsequent period ends. Alternatively, the amount of expenditure on R&D+I incurred in the year of assessment where the subsequent period ends, exceeds the amount of expenditure on R&D+I incurred in the year of assessment prior to the year of assessment in which the subscription for eligible shares was made.

Relevant Date: Finance Act 2021