Contributor: Amy Scally, Assistant Manager, Tax, BDO
It is our firmly held view, that the current legislative and administrative tax system governing the Employment Investment Incentive Scheme (“EII”) remains unnecessarily complex and, in certain respects, acts as a barrier to investment in Irish SMEs. At a time when domestic businesses require increased access to capital to support innovation, scaling and job creation, the EIIS regime should be simplified and modernised to encourage greater participation by both investors and qualifying companies alike.
We welcome the updated guidance issued by the Revenue Commissioners in December 2025, which has provided clarification in several areas.
However, there has been little to no corresponding amendments to the underlying legislation, and significant uncertainty remains in a number of key aspects of the regime. Given the substantial tax consequences that can arise where relief is subsequently denied or withdrawn, further legislative reform is required to provide certainty and reduce administrative burden.
Accordingly, we recommend that Budget 2027 introduces the following measures:
- Extension of the relief beyond 31 December 2026.
- Relaxation of the RICT (“Relief for Investment in Corporate Trades”) Group provisions to better reflect international best practice, in line with the equivalent UK EIS (“Enterprise Investment Scheme”) rules, thereby ensuring that companies and group are not unnecessarily excluded from the relief.
- Restoration in the rate of EII relief available for investments made through qualifying funds and for follow-on or expansion-stage risk finance.
- Expansion of the range of qualifying investment instruments to include SAFE (“Simple Agreement for Future Equity”) agreements and convertible loan instruments.
- A simplified, light-touch EII regime for smaller fundraising rounds, reducing compliance obligations and transaction costs for early-stage and smaller enterprises.
- A reduction in the minimum EII holding period to improve investor liquidity and increase the attractiveness of the scheme relative to alternative investment opportunities.
- Further investor-focused reforms, including permitting the utilisation of capital losses against EIIS investments and introducing a full CGT exemption on qualifying EIIS gains.
These measures combined would significantly enhance the attractiveness and competitiveness of the Irish regime, support business scaling, encourage long-term investment, and strengthen Ireland's ability to attract and retain entrepreneurial activity and innovation.
Content adapted from Finance Dublin Irish Tax Monitor.