Business Expansion Schemes
Subject to conditions, relief from income tax is available by way of a deduction from income to individuals who invest long-term risk capital in ordinary shares of unquoted companies resident in the State or resident in the European Economic Area with a qualifying establishment in the State and who are engaged in certain manufacturing and/or service industries in the State. In addition, research and development projects, undertaken with a view to the carrying out of such trades can also qualify for relief. The maximum aggregate amount of investment for which a person can get relief in any one year is €150,000 while the minimum investment in any one company must be €250.
Who can Claim?
An individual who is not connected with the Company in which the investment is made i.e.:
- Not a partner in the company.
- Does not control the company.
- Is not directly/indirectly possessing/entitled to acquire an interest of 30% or more in the company.
Conditions to Qualify
- The company must be resident in the State or is resident in the European Economic Area with an establishment in the State carrying out qualifying activities.
- The company must be regarded as a micro, small or medium-sized enterprise within the European Commission definition for the relevant period.
- The company must not be regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for rescuing and restructuring firms in difficulty
- Company cannot control or be under the control of another company.
- Shares cannot be quoted on the Stock Exchange.
- All issued shares in the company must be fully paid up.
- Company must not intend winding up within 3 years of receiving BES investment unless for bona fide commercial reasons.
A claim for relief must be made within 2 years of the end of the year of assessment in which the shares are issued. Relief is given as a deduction from total income before tax credits and allowances.
Maximum Relief - €150,000 - In any tax year.
Minimum Relief - €250
Husband and wife or the civil partners may both receive €150,000 relief provided they have sufficient income in their own right. There is no crossover of relief between spouses or the civil partners.
Where the full amount of investment cannot be granted in the year due to:
- Amount greater than total income, or
- Amount greater than €150,000
the excess may be carried forward and granted as follows:
- firstly, in respect of amount carried forward and,
- then, in respect of amount subscribed for shares in that particular year.
Business Expansion Scheme - New IT 55 (BES) Leaflet (PDF, 135KB) - valid with effect from 1st January 2007.
This is allowed in the year the shares are issued and not in the year in which they are subscribed for. However, investors in designated funds may elect in writing to have relief allowed in the year of investment provided the shares are issued the following year.