What rate of income tax relief can a higher rate taxpayer obtain in 2020 on an investment made in 2020 in an Employment and Investment Incentive (EII) scheme?

• A. 20%
• B. 30%
• C. 33%
• D. 40%

Answer: (B)

EII relief is a tax incentive that gives the investor a deduction against their income tax for investing in qualifying Irish companies. For a higher rate taxpayer in 2020, the relief on an EII investment is 30% of the amount invested, subject to the scheme’s limits and conditions (such as annual relief caps and required holding period). This means, in the year of investment, the investor can reduce their income tax by 30% of the qualifying investment, up to the allowed cap and provided all eligibility criteria are met. For example, investing €60,000 could yield up to €18,000 of tax relief in that year, assuming the investor has enough tax liability and the investment qualifies. The other figures (20%, 33%, 40%) do not align with the 2020 EII rate for higher-rate taxpayers.