The "Angel Investor Relief" scheme (formally referred to as relief for investment in innovative enterprises) commenced by Ministerial order on 1 March 2025.
Purpose
Angel Investor Relief aims to encourage angel investors to acquire significant minority shareholdings in early-stage innovative enterprises which are less than 7 years old.
A qualifying investor can avail of a reduced Capital Gains Tax rate of 16% (for individual investors) or 18% (for investments via qualifying partnerships) on a gain arising on the sale of the investment, subject to certain conditions. The reduced CGT rate is limited to a gain of up to twice the value of the investor’s initial investment. A lifetime gains limit of €10 million also applies.
General Conditions
The investment must be made before 31 December 2026. The investor must be unconnected to the company. An investment by an individual must be at least €20,000 although this is lowered to €10,000 where the investment results in a shareholding of 5% or more being acquired in the company. An investment by a qualifying partnership must be at least €20,000.
The shares must be held by the investor for at least 3 years before the disposal. The shares issued can be redeemable shares but cannot carry preferential rights to a dividend or preferential rights on a winding up. Relief is not available for share redemptions, repurchases or repayments of share capital. There cannot be any other terms or agreements in place that would substantially reduce the risks of investment.
Specific Certificates
The applicant company will need to obtain two certificates of qualification from the Revenue, being:
- a certificate of going concern (that the company is an SME (a Micro, Small or Medium-sized Enterprise) and is not an "undertaking in difficulty"); and
- a certificate of commercial innovation (that the company is an innovative enterprise and has a business plan and the expertise and experience to implement same).
Prior to issuing a certificate of qualification, the Revenue may consult with Enterprise Ireland if it considers it appropriate to do so and take account of any recommendations or report made by Enterprise Ireland. In turn, Enterprise Ireland may consult with any person who in its opinion may be of assistance to it in making any recommendations to the Revenue.
Eligibility criteria
Other than the certificates of qualification, there are certain other eligibility conditions that the applicant company must meet to apply for the relief. For example, the applicant company and its connected persons cannot control any company other than a qualifying subsidiary, and the applicant company itself cannot be under the control of any other company or of any other company and any person connected with that other company, unless such control is exercised by NAMA.
In addition, there are separate eligibility conditions to be met by the applicant company's linked businesses and partner businesses i.e. its "relief group" (where applicable). "Linked businesses" means two or more businesses that are regarded as linked enterprises because one exercises control over the other. "Partner businesses" covers two or more businesses which aren't linked businesses, but where one business holds 25% or more of the share capital or voting rights of the other business.
Impact
The implementation of this new relief scheme is a positive development in the Irish marketplace, although it remains to be seen how the process for issuing certificates of qualification will operate in practice and how much assistance the Revenue will seek from Enterprise Ireland going forward.
For further information on above and/or how Angel Investor Relief compares to the Employment Investment Incentive Scheme (EIIS) relief, please contact Kyle Wimpress or your usual Beauchamps contact.
