The Business Expansion Scheme (BES) has been in operation for 25 years. It enables businesses to raise share capital and investors can write off their investment against tax.

In 2009, €62.3m was invested in 199 companies (in 2008 €135.8m was invested in 290 companies). The BES allows individual investors to obtain tax relief on investments (up to a maximum of €150,000 per annum) in each tax year up to 2013.

How It Works

•  Investments can only be made in businesses involved in certain sectors (manufacturing, services, tourism, R&D, plant cultivation, construction and leasing of advance factories, and certain music–recording activities)
•  Average investments range from €10,000 to €50,000
•  Qualifying businesses can contact prospective investors directly, approach a specialist accountancy firm, or pitch directly to a dedicated BES fund
• Investee businesses must be unquoted (those listed on the Irish Enterprise Exchange or traded in an over-the-counter market do qualify)
•  Investors must purchase new ordinary shares in the businesses (shares must carry no preferential rights)
• The minimum investment in any one qualifying business is €250
• The maximum investment by all investors in any one business or group of businesses is €2m (subject to a maximum of €1.5m in any 12-month period)
•  There must be no condition that eliminates the investor’s risk 
• If the business is not trading at the time the shares are issued, it must commence trading within 2 years of the share issue (if the business is mainly involved in R&D relating to the qualify trade, it must commence trading within 3 years of the share issue)
• Shares must be held for 5 years
• Costs for the company: 5% commission; legal fees of €5,000 to €10,000; 10% to 20% premium paid to investors.

To find out more information go to http://www.revenue.ie/en/tax/it/leaflets/it55.html

Source: The Sunday Times