This scheme provides income tax relief for investment by certain individuals in newly incorporated companies engaged in a BES-type activity or in certain research and development activities.
The scheme operates by relieving a sum of up to €600,000 against the total income of the individual which is used to subscribe for shares in a new company for any of the six years immediately preceding the year in which the investment is made.
The maximum relief in any one tax year is €100,000. The investment must be made in two stages with the second stage being made before the end of the second tax year after the first investment was made. To qualify for the relief the individual must:
• Be a full-time employee or a full-time director with the new company;
• Derive no less than 75pc of his total income from Schedule E sources (normally income subject to PAYE). Income from other sources must not be more than €50,000 in each of the three years prior to the year in which the employment begins;
• Not have possessed or have been entitled to acquire more than 15pc of the ordinary share capital, loan capital or voting power of a company other than a seed capital company except in specified limited circumstances;
• Acquire at least 15pc of the issued ordinary share capital of the seed capital company and retain that 15pc for one year from the date of investment or from the date on which the company commences to trade, whichever is later.