Investing
Employment Investment Incentive: tax relief for investing in Irish SMEs
Last updated 16 October 2026
The Employment Investment Incentive lets you deduct 50% to 125% of money put into a qualifying small company from your income: up to 50% relief.
The Employment Investment Incentive (EII) gives income tax relief to people who buy new shares in qualifying small and medium-sized companies. It exists to help those companies raise money, and the conditions come from EU State aid rules. Revenue's investor guidance is Tax and Duty Manual 16-00-04.
How the relief works
You deduct part of what you invest from your total income, which lowers your income tax. The part depends on the kind of investment. It is set so that, at the 40% rate, relief can't exceed the State aid maximum:
| Type of investment | Deducted from income | Most relief |
|---|---|---|
| First investment in a company not yet selling in any market | 125% | 50% |
| First or follow-on investment, within 10 years of starting or 7 years of first sale | 87.5% | 35% |
| Expansion into a new activity, or follow-on investment after those periods | 50% | 20% |
| Any investment through a qualifying investment fund | 75% | 30% |
Someone earning €90,000 who puts €20,000 into a young company in 2026, with a statement that 87.5% can be deducted:
| Invested | €20,000.00 |
| Deducted from income (87.5%) | €17,500.00 |
| Income tax without the claim | €23,200.00 |
| Income tax with the claim | €16,200.00 |
| Tax saved | €7,000.00 |
That is 35% of the investment, because all of the deduction came off income taxed at 40%. Relief is from income tax only, not USC or PRSI. Unused relief carries forward to later years.
The main conditions
- You subscribe in cash for new shares, at least €250, and keep them for four years.
- You must not be connected with the company from two years before to four years after the investment. Neither you nor a relative can be a director, employee or partner. With some exceptions, neither of you can already hold shares in it.
- Relief is on up to €1,000,000 a year in total across these schemes.
- The company must give you a Statement of Qualification, by 31 December of the year after the shares were issued. Investing through a fund, you get a manager's certificate instead.
With the statement, claim on Form 11 or Form 12 for the year you invested. Relief is withdrawn if you sell within four years or the company stops qualifying.
When you sell
A gain is taxed as normal under Capital Gains Tax. If you sell at a loss, the loss is restricted to take account of the income tax relief you received.
Budget 2027
The current rules cover shares issued by 31 December 2026. Budget 2027 said EII, the Start-up Capital Incentive and Start-up Relief for Entrepreneurs (SURE) will be extended in their current form. That is subject to the new EU block exemption rules due to apply from 1 January 2027, and to Finance (No. 2) Bill 2026.
Family members of existing shareholders in a new micro company may qualify under the Start-up Capital Incentive instead. To see your marginal rate, use the PAYE calculator.
Work it out
Sources
- Revenue: Tax rates, bands and reliefs (checked 25/10/2026)
- Department of Finance: Budget 2027 Tax Policy Changes (section 2.2: taxation of investments; chapter 9: Investment Account) (checked 25/10/2026)
- Revenue: How to calculate CGT (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.