Employment Investment Incentive (‘EII’) and Start-Up Relief for Entrepreneurs (‘SURE’)

Minister Donohue announced in his Budget speech that he intended to bring forward a “priority package of measures” in the Finance Bill in relation to EII and SURE. 

In fact, the Finance Bill has provided for a complete amendment/substitution of the legislative part governing these reliefs and it accounts for close to a third of the content within the Bill. Earlier this year, Indecon Economic Consultants were commissioned to carry out a review of EII and SURE and the amendments have been largely driven by their report, which was published in September 2018. The focus is also to simplify the legislative framework, which has been generally viewed as onerous and largely impacting on the effectiveness of the relief.

Whilst there is likely to be a good degree of ‘devil in the detail’ once all aspect of the legislation have been examined in detail, some of the key points to note regarding the amendments made are summarised below:

  • The provision of a new ‘self-certification’ process to replace the existing approval regime, whereby companies and investors alike will certify their satisfaction of the conditions regarding a ‘qualifying company’ and ‘qualifying investor’ respectively. The company/investor will be subject to clawback such they incorrectly certify the conditions, which are relevant to them. This is aimed at reducing the current delays that exist in getting approval from Revenue. 
  • A similar self-certification process will apply to SURE. 
  • There will be some scope for companies to continue to seek Revenue confirmation on some of the more complex criteria, mainly is respect of the impact of State Aid rules. 
  • Expansion of the relief for small start-up companies (i.e. < 7 years old, < 10 employees and turnover under €2 million) such that the restrictions regarding investments from connected parties have been eased. A lifetime investment limit of €500,000 would apply. 
  • In addition, the definition of ‘control’ has been limited to a single consideration, as opposed to three under the previous legislation. 
  • It has aligned the definition of professional services in the context of determining a ‘qualifying company’ to that under the Key Employee Engagement Programme (‘KEEP’) scheme, which is beneficial in terms of clarity as to the scope of this exclusion. 
  • Allowing for preference redeemable shares under the scheme 
  • Removal of previous restrictions on companies within EII quoting on the stock exchange (previously restricted to within 4 years of raising the finance)

We intend to follow up with a more detailed publication on EII/SURE in due course once the details of the legislative have been evaluated.

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