Government to extend tax relief for start-up investors

A scheme to encourage more investment in Irish start-ups has been extended for a further three years in Budget 2022.

Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath arriving at Government Buildings, Dublin PA Photo

The Employment Investment Incentive is also being opened up to “a wider range of investment funds” the minister for finance said on Tuesday.
The scheme allows for a tax relief of up to 40pc on shares bought in smaller companies, with the relief diminishing over four years. That will now be revised to seven years.

“The Employment Investment Incentive (EII) scheme has the potential to become a real driver of investment in early stage companies and high-potential start-ups,” the minister for finance, Paschal Donohoe, said in the Dáil. “In recent years, positive changes have been made to the scheme but it has yet to reach its potential.”

Angel investors have criticised the scheme for being unclear and subject to the Revenue Commissioners’ whims, with companies unsure if they will be able to access the scheme after the four-year window.

The government is also relaxing the rules on when the relief should be paid back in the event of an investor redeeming their shares in a start-up, and is removing a 30pc expenditure rule under the relief.
The Irish Venture Capital Association (IVCA) welcomed the announcement, given the changes coming down the line with the global corporate tax deal.

“With pending changes in taxation of multinationals in Ireland, now is a highly appropriate time to review measures to create the right environment for indigenous, innovative companies which have the potential to become global players,” said Nicola McClafferty, IVCA’s chairperson.

Source: Independent.ie

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