An update on the Irish Employment Investment Incentive Scheme (EIIS)

In November 2023, the Corporate team in Dublin set out a useful summary of some impactful changes to the Irish Employment Investment Incentive Scheme following Finance (No.2) Bill 2023.

The nature of the changes, although necessary to harmonise the scheme with EU State Aid rules, lead to a reduction in relief and a heavy blow to the attractiveness of EIIS. Our Corporate law experts in Ireland summarise key changes to the Irish Employment Investment Incentive Scheme (EIIS) introduced by The Finance Bill 2024 (the Bill) to improve the landscape of the scheme.

You can find the team's 2023 summary here.

Background to EIIS

EIIS is a well-established and widely utilised tax efficient investment scheme in Ireland. It  provides an investor with tax relief on their investment and sources of non-earned income such as dividends and rental income. The scheme aims to encourage individuals to provide equity-based finance to Irish companies. Find out more on Ogier's expertise on EIIS.

The Bill sets out that the 35% relief rate shall be recognised on a retrospective basis for shares issued on or after 1 January 2024.

Other relevant changes to EIIS

Extended duration of scheme

Recognising the critical role that SMEs play in the Irish economy, the Government has decided to extend the duration of the scheme for an additional two years, setting the new expiration date to 31 December 2026. This extension is designed to provide continued support and stability for both existing and prospective investors, ensuring that they have ample time to plan and execute their investment strategies.

Increased limits and benefits

The new limit will allow qualifying investors to invest up to €1 million per annum (increased from €500,000), thereby enabling greater capital inflow into SMEs. This is expected to attract more substantial investments, facilitating enhanced growth and development opportunities for small and medium enterprises. The maximum investment limits at company level of €16.5 million (lifetime) and €5.5 million (annual) is maintained.

Conclusion

The changes and especially the increase of relief rate for "follow on" investments is a welcome change for the Irish "scale-up" community. In our experience, there was worry from SMEs that enticing investors by way of EIIS would be gravely affected by the Bill. Despite an apparent loss of interest, EIIS investments did take place in 2024. A revelation that the new rate is retrospective and shall be maintained going forward will likely result in a return to regular EIIS investment.

How Ogier can help

Ogier's experienced Corporate team in Ireland provides commercial, practical advice on Employment Investment Incentive Scheme (EIIS) investments. For further information and expert advice on EIIS, please contact the team via the details provided below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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