The Employment and Investment Incentive Scheme (EIIS) is a tax relief incentive scheme which enables individuals to avail of tax relief on the cost of their investment (maximum investment €150,000 per annum) in qualifying small-to-medium sized Irish companies. An individual with a taxable income liability in the year the EIIS investment is made can obtain a tax refund or credit on the following sources:
1. PAYE earnings
2. Self-employed earnings
3. Rental income
4. Approved Retirement Fund (ARF) distribution income
Tax relief is available in two tranches: an initial 30% in year one with a further 10% in year 4 i.e. 40% – the marginal rate of tax.
A ‘coupon’, similar to an interest rate is typically offered at 2% – 3% per annum (please note this is subject to Capital Gains Tax @ 33%).
Kitty invests €10,000 in 2016 – she gets €3,000 (30%) tax back in the same year. In 2020 she’ll get the final €1,000 (10%) tax back, along with her initial capital invested €10,000, plus her coupon €536 (€10,000 x 8%* less 33%).
Total Invested = €10,000
Total Returns = €10,000 + €3,000 + €1,000 + €536 = €14,536
IRR = 11.34 per annum
EIIS is one of the few remaining sources of total income tax relief. Contact us for the most recent Revenue approved schemes.
*assumes coupon 2% and 4 year term
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