Ireland has received approval from the EU for the amendments to the Business Expansion Scheme (BES) and Seed Capital Scheme which were included in Finance Act 2007. Prior to implementing any scheme, it is crucial to note that there are conditions attached to the approval.

Confusion had arisen because the EU's initial announcement seemed to suggest that it had made its decision with “no objections”. However, according to the Department of Finance press release on the approval, the following conditions apply as and from 1 January 2007:

• Medium-sized enterprises may qualify if they are located in assisted areas (currently includes all counties except Dublin, Meath, Kildare and Wicklow, as defined under EU State aid guidelines). In non-assisted areas (currently counties Dublin, Meath, Kildare and Wicklow) they may qualify where they are in seed or start-up phase only.
• In order to comply with EU rules on the cumulation of State aids, a company that raises finance under the BES and/or the SCS will have the level of other State aids affected (with the exception of grants for research and development).

The Department of Finance press release is available at http://www.finance.gov.ie/.

Commencement Order and Regulations

The Commencement Order (reproduced at Section 2.04) and Regulations (reproduced at Section 2.05) provide that as and from 1 January 2007 medium-sized enterprises may qualify if they are located in “assisted areas” (*). Medium-sized enterprises will benefit from the scheme if located in non-assisted areas only where they are in seed or start-up phase.

The Regulations also provide powers for the Revenue to publish on their website a list of companies that have raised finance under BES and SCS together with details of the amounts raised.

The European Commission approval included a condition where the aid provided under BES and SCS must be cumulated with other State Aids. According to the Department of Finance press release, cumulation, where it applies, will be operated by the State bodies granting financial assistance under other State Aid schemes. Therefore, any queries regarding the rules governing the cumulation of State Aids should be addressed to the State body responsible for the administration of the State Aid in question.

[* Currently, the assisted areas are defined as all of the Republic of Ireland apart from Dublin, Kildare, Meath and Wicklow. From 1 January 2009, Cork City and county will be non-assisted, apart from Cork docklands]

BES: Updated Information Leaflets

The Revenue have published updated information leaflets on the BES and SCS schemes which take account of the recent changes to the schemes. A copy of the BES Information Leaflet is available at http://www.revenue.ie/leaflets/it55.pdf. A copy of the SCS Information Leaflet is available at http://www.revenue.ie/leaflets/it15.pdf.

BES: Updated Forms

Forms RICT Outline and RICT1 in relation to relief for investment in corporate trades have been updated to reflect the changes in the schemes.

Form RICT Outline

The purpose of Form RICT Outline is to enable a company to ascertain whether or not a proposed share issue is likely to attract relief under the scheme of relief for investment in corporate trades.

The updated Form RICT Outline is available at http://www.revenue.ie/forms/rict-outline.pdf.

Form RICT1

Notes to this form explain that a claim for relief by an individual in respect of a subscription for eligible shares in a qualifying company cannot be allowed unless a certificate of relief has been issued by the company in the specified form.

Such a certificate cannot be issued until the company has been authorised to do so by the Inspector of Taxes. To obtain the authority to issue a certificate a company must submit the form RICT1.

The updated Form RICT1 is available at http://www.revenue.ie.