Business Expansion Scheme (BES)
Employment and Investment Incentive Scheme replaces the Business Expansion Scheme (BES) A new Employment and Investment Incentive Scheme has been announced to replace the current Business Expansion Scheme. The scheme significantly broadens the scope of the scheme a qualifying trade limitations have been removed and the scheme is available to the majority of small and medium sized trading companies. The scheme is open to all trades except for:
- Financing activities
- Dealing in or developing land
- Operating or managing nursing homes and hotels
- Professional service companies
The lifetime limit that a company can raise has been increased from €2m to €10m with the annual amount being increased from €1.5m to €2.5m.
An individual may invest up to €150,000 per annum in this scheme. The maximum limit applies separately to both spouses, provided that they both have sufficient income in their own right. Where full relief cannot be availed of in a tax year, the excess can be carried forward to subsequent years.
The period for which shares need to be held has been reduced from 5 years to three years. A claw-back of relief will arise if shares are disposed of within 3 years.
Tax relief for subscriptions for eligible shares has been reduced from 41% to 30%, with a further 11% relief granted if at the end of the holding period the company has increased its numbers of employees since the investment was made, or the company has increased its expenditure on research and development.
The current BES Scheme will continue to remain in place until a Commencement Order gives effect to the new relief.
The scheme is due to expire on the 31st of December 2013.
Seed Capital Relief
This relief was introduced to encourage individuals who cease employment to start up their own businesses using a company structure. The relief is given by way of a deduction against total income for the six years preceding the cessation of employment. The maximum available is €100,000 per annum (previous maximum €31,750 per annum).
This relief is given by way of a refund of PAYE paid by the individual over the six years preceding the year of investment. There is a minimum shareholding requirement of 15% for one year in order to qualify for the relief (previously two years).
The Finance Act 2011 has also extended the trades that qualify for investment in.
The scheme is due to end on 31 December 2013.
The limit on the amount of money a company may raise from seed capital relief is €2,000,000 subject to a limit of €1,500,000 in any twelve month period .
Tip: The investment may be made in two stages
Film Scheme – Companies and Individuals
This relief is given by way of deduction against total income and is confined to a maximum of 100% of €50,000) for any tax year. Relief is available to both spouses and relief may be claimed under both schemes, giving a potential maximum tax saving of €164,000 if both schemes are availed of by both spouses. Any unrelieved amount can be carried forward to the next tax year. For companies, the maximum amount deductible is 80% of €3,810,000 to enable the production of a single film.
The cap on the maximum amount of funding per film is €50,000,000 (previously €35,000,000).
The new cap is subject to a Ministerial Order.
The scheme is due to end on 31 December 2015 (subject to Ministerial order).
Tip: Film schemes may be structured to favour small investors where a financial institution provides both the funding for the €50,000 contribution required by the individual and the balance of the loan amount, this reduces the return on the investment but can make the investment more affordable.
