Tax Relief

Funds Eire: Authorities extends tax relief for start-up buyers

A program to encourage investment in Irish startups has been extended for a further three years in the 2022 budget.

The incentive for employment investment will also open to “a wider range of investment funds,” the finance minister said on Tuesday.

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The regulation provides for a tax reduction of up to 40 percent on shares in smaller companies, with the relief decreasing over a period of four years. That is now being revised to seven years.

“The Employment Investment Incentive (EII) program has the potential to become a real driver for investments in young companies and start-ups with high potential,” said Finance Minister Paschal Donohoe in the Dáil. “There have been positive changes to the program in recent years, but it has not yet reached its potential.”

Angel investors have criticized the program for being unclear and subject to the whims of the Revenue Commissioners. Companies are unsure whether they will be able to access the program after the four year window.

The government is also relaxing the rules on when the relief should be repaid in the event an investor returns their stake in a start-up, and is removing a 30 percent spending rule under the relief.

The Irish Venture Capital Association (IVCA) welcomed the announcement in light of the changes that will come with the global corporate tax treaty.

“With the changes in the way Irish multinationals are taxed, now is a very good time to review measures to create the right environment for local, innovative companies with the potential to become global players,” said Nicola McClafferty , Chair of IVCA.

She added: “In addition to the EIIS, the Association looks forward to continuing to work positively with the government to unlock far greater asset allocation from institutional investors to Ireland’s native high growth SMEs. Now is the time to build a stock culture in Ireland that enables early investment in private companies to be an attractive asset class not only for institutions but also for individuals. “

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