Q. I have a small sum of money to invest – and in something better than the current deposit interest rates now on a downward turn. A mate of mine told me about investing in companies and getting tax relief on the investment at the same time as well as a hoped for decent return on maturity of the investment. Can you let me know if this is a good idea and worth considering – while I can accept a little risk I don’t want to lose all my money. Thanks Paddy – Mallow Co Cork
A. The scheme Paddy your friend is probably talking about is the Employment & Investment Incentive Scheme (EIIS) – a 4 year tax relief incentive scheme which enables investors to deduct the cost of their qualifying investment from their total income for income tax purposes. The Scheme was introduced under the Finance Act, 2011 to replace the former Business Expansion Scheme (BES). Private placing is suitable for early stage or start-up companies who can raise funds from family and friends who can receive between 20% and 50% tax relief – 50% for new investments in companies not previously operated in any market. Through an intermediary the relief is 30%. The maximum investment per individual each year now is € 500,000 with the shares held for 4 years and the investment window is usually open between September and December each year. Most of the stockbroking firms offer a basket of companies in their EIIS offering. A Designated Investment Fund is suitable for more established companies with a strong trading record and a commercial focus and for raising funds from outside investors. The maximum a company can fund-raise in any one year is € 5.5million while the lifetime maximum is € 16.5million. Take professional advice.