By Neil Gaynor, 30th August 2010
The Business Expansion Scheme (BES) allows an individual investor to obtain income tax relief on investments up to a maximum of €150,000 per annum in each tax year up to 2013. Relief is available at the investor’s highest rate of income tax. An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €150,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2013, subject to the normal limit of €150,000 on the amount of investment that can be relieved in any one year.
In order to qualify, investments must be made in companies engaged in certain manufacturing; service; tourism; R&D; plant cultivation activities; in the construction and leasing of advance factories; or, in certain music recording activities.
Investors must purchase new ordinary share capital in the company. Shares must carry no preferential rights. The maximum investment by all investors in any one company or group of companies is €2m subject to a maximum of €1.5m in any one twelve month period. There must be no condition which would eliminate the investor’s risk.
Relief can be claimed immediately in the case of established companies or after four months’ trading in the case of new companies.
If the company is not trading at the time the shares are issued, it must commence trading within two years of the share issue. If the company is mainly involved in R&D activity relating to the qualifying trade it must commence trading within three years of the share issue.
Shares must be held and certain conditions satisfied in relation to the investor for a period of five years. Other conditions in relation to the company need only be satisfied for three years.
For further information please contact Neil Gaynor.
Neil Gaynor & Company, Chartered Accountants, provide Accountancy, Business Advisory, Tax, Training & Mentoring services to small business. For further information and a free consultation contact Neil Gaynor on 071-719144366
or 087-2547941. www.neilgaynor.ie
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