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Changes to EIIS Legislation in 2024

In the 2024 Budget, significant alterations were introduced to the Employment Investment Incentive Scheme (EIIS). These changes aim to both enhance and restrict certain aspects of the scheme.

One of the positive revisions involved doubling the maximum investment eligible for relief under the enhanced EIIS. This allows individuals to claim relief on investments up to €500,000 per annum, provided they retain the shares for a minimum of 4 years.

However, the Finance Bill brought forth some unwelcome modifications. The fundamental change pertains to the rate of tax relief. Previously, a uniform income tax relief was granted at the marginal rate of 40%. Starting from 2024, different rates of relief will apply based on the eligibility criteria met by the investee company. Additionally, the rates of tax relief will vary depending on whether investments are made directly into the company (ranging from 20% to 50%) or indirectly via a financial intermediary (fixed at 30%).

“Follow-On” investments made directly into the company will now receive only 20% tax relief. This reduction from the expected 40% relief could pose challenges for companies completing funding rounds, as it deviates from their initial financial plans.

Furthermore, the definition of “eligible shares” for direct investments has been refined. From 2024, only full risk ordinary shares will qualify as eligible investments.

For companies seeking funds, the maximum investment limits at the company level have been raised from €15m to €16.5m (lifetime) and from €5m to €5.5m (annual). Additionally, the threshold for companies aiming to secure “expansion risk finance” supporting the environment has been eased to 30%, down from the typical 50%.

These changes will reshape the EIIS landscape in 2024. It’s crucial to note that 2023 marks the final year where investors are guaranteed a 40% tax relief.

Investments for Green Crowd 2023 EIIS Opportunities are now open. For more detailed information, please visit www.greencrowd.ie or reach out to us via email at info@greencrowd.ie.