Employment and Investment Incentive Scheme (EIIS)

Definition

The Employment and Investment Incentive Scheme (EIIS) is a tax relief incentive introduced by the Irish government to encourage investment in small and medium enterprises (SMEs). 

What is the Employment and Investment Incentive Scheme?

Under the EIIS, individual investors who buy shares in qualifying SMEs can get tax relief on their investment. The relief is provided in the form of income tax relief and can be claimed against the investor’s income tax liability in the year of investment and/or the previous tax year. 

To be eligible for the EIIS tax relief, investments must be made in qualifying SMEs that meet certain criteria. These criteria include restrictions on the size and nature of the business, the use of funds raised, and compliance with relevant regulations. 

There are limits on the amount of investment eligible for tax relief under the EIIS. Individual investors can invest up to a maximum amount in any tax year. The total amount of tax relief that can be claimed by an investor is also subject to a cap, which is calculated based on the amount of the investment and the investor’s tax liability.

Investments made under the EIIS are typically subject to a minimum holding period, during which investors are required to retain their shares in the qualifying SME. This holding period is intended to encourage long-term investment and support the stability and growth of the businesses. 

Example of the Employment and Investment Incentive Scheme

John is interested in supporting small businesses while also reducing his tax liability, and learns about the Employment and Investment Incentive Scheme.

John decides to invest €50,000 in shares of a qualifying SME that specialises in renewable energy technology. By doing so, he can get income tax relief on his investment, effectively reducing his overall tax bill. 

Through his investment in the EIIS, John not only benefits from tax relief but also plays a part in supporting the growth and development of small businesses in Ireland’s economy.