State Aid approval has been received from the European Commission for the Employment and Investment Incentive (EII) scheme and the Seed Capital Scheme (SCS). The new incentives came into effect on Friday 25 November 2011 until 31 December 2013. Tax relief under the Business Expansion Scheme (BES) will continue to be available until the end of year to facilitate taxpayers who have already subscribed for shares, or who wish to do so, in a BES qualifying company, and to receive tax relief at BES rates. Chartered Accountants Ireland had made representations that because of the delay in receiving EU State Aid approval, a phase out period for BES, as is now available, was required.

Members will recall that the new EII, which will replace BES, was first announced in Budget 2011 and was subject to approval from the European Commission for its effect. In November, the Minister for Finance announced that he had secured the necessary approval from the European Commission for the new EII and Seed Capital Scheme. The Minister also announced the end of relief under the BES and stated that “in view of the extended time frame that has been involved in achieving the approval of the European Commission, I have decided to allow for both schemes to run concurrently up until the end of this year”. This means that up until the end of this year taxpayers may qualify for tax relief for investment in corporate trades under either the BES or the new EII scheme.

A small number of amendments to the legislative provisions governing the new schemes including those providing for the commencement of the schemes from 25 November 2011 will be included in Finance Bill 2012. The Minister announced that full details will be set out in that Bill but the changes are essentially that as and from 25 November 2011:

• A qualifying company must carry on relevant trading activities from a fixed place of business in the State;
• Removal of the requirement for a minimum percentage of the company's expenditure, in relation to its trading activities, to be made in the State in order for it to qualify for the scheme.

Following approval for the new schemes Revenue has published a number of guidance documents on the revised Seed Capital Scheme and the new EII scheme and guidance on the definitions used in both schemes. Also published is an application form for outline approval for relief under the schemes. Readers should note that the purpose of this form is to ascertain whether or not a proposed share issue is likely to attract relief under the scheme and entitlement to relief is determined when the share issue has taken place and the fact that a company may obtain outline approval does not guarantee the availability of relief.