Investment scheme for firms needs boost: PwC
Further work is needed to make the employment and investment incentive scheme (EIIS) more attractive to potential investors, according to consulting group PwC.
EIIS works by allowing investors to obtain tax relief on investments made in small and medium businesses that may be struggling to access finance through more traditional routes. The maximum annual relief for an investor is €150,000, and they cannot sell their shares in the business for a minimum of four years.
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For businesses that qualify for the scheme, the fundraising limit under EIIS is €5m annually, and €15m overall.
But companies have highlighted a number of issues that affect them on a practical level when it comes to the scheme, according to PwC.
A business will only be able to access EIIS funding if the money is received within seven years of its establishment. Meanwhile, additional rounds of EIIS fundraising must be stated in the company's original business plan, making careful drafting of the plan even more critical.
In addition, the annual €150,000 investment relief limit available under EIIS should be increased to a level closer to €1m to compete with the equivalent tax break in the UK, according to PwC.
PwC says that full EIIS relief should be given to investors in the year of investment rather than the current "phased system" where three-quarters of the relief is given in the year of the investment, with the final 25pc provided after four years.
"Hopefully changes will be made to the EIIS in the 2020 Budget to make the scheme more attractive so that SME's can get access to much-needed finance," said Daniel O'Beirne, tax manager at PwC.