EII Scheme – how it can work

Example of how EII scheme works:

Company A Ltd wants to expand into new markets, but will need an investment of €100,000. Seamus, is a director and sole shareholder of Company A Ltd. There are no other employees and no debts apart from an overdraft and HP agreement. Seamus leases a commercial property to the company and gets €20,000 a year. He also receives a salary of €34,000 and his wife, Ann has, other PAYE income of €55,000.

They have one adult child, Jamie, who has an income of €60,000 and Seamus’s sister Jane is a doctor, with an income of over €120,000.

Seamus and his extended family above may make investments to the company through an EII scheme over the two years 2016 and 2017. The reason is they get the benefit of tax relief on their income over both years as it is important to cover income taxed at 41% to fully benefit. So, all of the investors get 30% tax relief on the investment in 2016 and 2017. The remaining tax relief in 2020 and 2021 is then subject to the company increasing relevant employment.

The shares have to be held for three years and the company can give no guarantee to pay the money back under the EII

There are a lot of conditions that apply to obtaining EII relief and both tax and investment advice should be obtained in advance of making any investment.

Any queries on same give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie