EII Scheme Information for Investors

The 2018 Davy EIIS Fund

For further information, please contact us or call the Davy Execution Desk on 01 614 9000.

BES management DAC

 

 

Key Characteristics of BES Management DAC:

Managed by BDO and Davy;
Successfully raised seven EII Scheme Funds over the past seven years;
Previously raised 19 BES Funds over the past 23 years;
Raised over €175 million which is invested in 169 Irish companies; and
Funds are managed by a professional and experienced management team.

What Is the Employment and Investment Incentive Scheme?

The Employment and Investment Incentive Scheme ("EII Scheme") is a tax relief incentive scheme which provides all-income tax relief to Qualifying Investors for investments in certain qualifying small and medium sized companies ("SMEs")*.
The EII Scheme offers one of the few remaining income tax reliefs and is one of the few sources of total income tax relief (which includes, for example, rental income).

Prospective Investors

Prospective Investors should determine the suitability of the investment based on an assessment of their own personal circumstances, attitude to and capacity for investment risk and need for access to funds. The investment may be suitable for Investors who:

Do not need access to their investment for the term of the investment, which will be at least 4 years from the date the Fund makes its investments;
Do not need an income from their Investment for the term of the investment;
Will be able to avail of income tax relief at the higher rate on the full investment, within the relevant limits and restrictions;
Are aware they may lose some or all of their investment; after income tax relief; and
Can afford to lose some or all of their investment in return for seeking a higher rate of return than currently available on low risk investments for a similar period.
  • Benefits of investing in the 2018 Davy EIIS Fund:

    1. Opportunity for Qualifying Investors to avail of one of the few remaining - all income tax reliefs currently offering up to 40%** income tax relief*** (subject to certain qualifying conditions).

    2. Opportunity for Qualifying Investors to invest in indigenous Irish companies with future growth potential; and

    3. Avail of a professional, experienced and knowledgeable investment team.

    **Being the current higher rate of income tax and assuming continuation thereof.

    ***Terms and conditions apply. Income tax relief on an Investment in the Fund may be available to Investors in two tranches. Please refer to the section headed “Income Tax Relief” on page 27 for detailed information relating to claiming the income tax relief. Depending on the availability of Managers Certificates, Investors can avail of the first tranche of tax relief by deducting 30/40ths of the Investment amount subscribed to the Fund from their total income for income tax purposes for either the tax year of subscription ending on 31 December 2018, or if so desired for the tax year of Investment by the Fund ending 31 December 2019 subject to certain conditions being fulfilled by the Investee Companies as further detailed in the section headed “The Relief” on page 28. Investors can deduct 10/40ths of the Investment amount subscribed to the Fund from their total income for the year of assessment following the year of assessment in which the Subsequent Period ends (means the period beginning on the date on which the Eligible Shares were issued and ending three years after that date), subject to conditions in relation to employment levels or expenditure on Research & Development and Innovation being fulfilled by the Investee Companies in which the Fund has invested. If the Investee Companies fail to meet the relevant conditions you will not be able to claim the second tranche of income tax relief. You should consult your tax advisor about the tax relief rules which may apply in your circumstances. This Investment may not be suitable for all Investors. For more information on the tax relief, please refer to section headed “The Relief” on page 28.
  • Risks of investing in The 2018 Davy EIIS Fund

      1. This is a medium to long-term Investment (at lest four years from the date of Investment by the Fund) and there is no early exit mechanism.

      2. If you invest in this Fund you may lose some or all of the money you invest.

      3. There is no guarantee that the Fund will achieve its Investment objectives or primary objective.

      4. Investors are exposed to the performance of the small and medium sized companies in which the Fund will invest. The Fund will invest in companies which by their nature are high risk.

      5. The availability of the income tax relief on the Investment amount is based on our understanding of current tax legislation and the current Revenue Commissioners’ interpretation thereof. Legislation and Revenue Commissioners interpretation is subject to change including retrospectively without notice.

      6. Income tax relief which is available in two tranches may not be granted or may be withdrawn where already claimed, in part or in full, if the conditions of the legislation are not satisfied by the Fund and/or Investee Companies, including:

        i. The Manager may not succeed in finding suitable companies and/or fully investing the Fund which may result in a return of uninvested funds and a consequent reduction or recovery of the income tax relief already claimed or potentially available to Investors.

        ii. Statements of Qualification for the first tranche of income tax relief of 30/40ths or the second tranche of income tax relief of 10/40ths may not be issued by Investee Companies if the conditions as set out in the section Income Tax Relief on page 27 are not fulfilled. In such circumstances the Manager cannot issue a Managers Certificate and income tax relief will not be available to the Investors, or if already claimed may be required to be refunded to Revenue by the Investor.

        iii. If any of the companies in which the Fund invests fail to spend 30% of the amount raised on a Qualifying Purpose within two years from the issue of Eligible Shares, the Investee Company cannot issue a Statement of Qualification; in such circumstances, the Manager cannot issue a Managers Certificate and the first tranche of income tax relief on 30/40th of the Investment will not be available to the Investor.

        iv. If any of the companies in which the Fund invests fail to meet the employment numbers and emoluments or Research & Development and innovation expenditure criteria specified in the legislation, they cannot issue a Statement of Qualification (follow-on relief). In such circumstances the Manager cannot issue a Managers Certificate and the second tranche of income tax relief of 10/40ths of the Investment will not be available to the Investor.

      7. Income tax relief which is available in two tranches may not be granted or may be withdrawn where already claimed, in part or in full, if the conditions of the legislation are not satisfied by the Fund and/or Qualifying Investors, including:

        i. You may not have sufficient income taxable at the higher rate so that part or all of the first tranche of income tax relief on 30/40ths of the Investment amount, if obtained, could be obtained at a lower rate than 40%, the current higher rate of income tax.

        ii. The higher rate of income tax could reduce from its current 40% rate so that the second tranche of income tax relief of up to 10/40ths of the Investment amount if obtained in the year of assessment following the year of assessment in which the Subsequent Period ends, could be obtained at a lower rate than the current 40% rate.

        iii. The second tranche of income tax relief of up to 10/40ths of the Investment amount, if obtained, could be obtained at a lower rate than the higher rate then applying.

        iv. No income tax relief will apply to the second tranche of income tax relief of up to 10/40ths of the Investment amount in the year of assessment following the year of assessment in which the Subsequent Period ends if you have no taxable income at that time.

        v. You may lose part or all of the income tax relief you obtain on the Investment amount if you receive value from any of the companies in which the Fund invests within a period of two years before and ending four years after the Fund invests in the company (as detailed in the section “Withdrawal of Relief – Investor” on page 33).

      8. The proposed EII Scheme will operate on a self-certification basis which will require Qualifying Companies to self-certify and issue Statements of Qualification. The Investee Company will bear the risk of the Relief not being granted or withdrawn as a result of incorrect self-certification and circumstances detailed in the section “Withdrawal of Relief – Investee Company” on page 33. However, in these circumstances, the Investor may bear the risk of the commercial impact of a withdrawal of Relief from the Investee Company and hence may impact the value of the Investment.

    Warning: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for individual tax or investment advice. Potential Investors should seek competent professional advice specific to their circumstances prior to investing. Investors are responsible for establishing their entitlement to participate in this investment and for making their own tax relief claims.

The Funds are invested in established, indigenous Irish companies with future growth potential. Set out below is a sample of previous investee companies:

BES Management DAC

BES Management DAC is regulated by the Central Bank of Ireland. BES Management DAC is a joint venture company owned by Davy and BDO. J&E Davy, trading as Davy, is regulated by the Central Bank of Ireland.

Davy is a member of Euronext Dublin and the London Stock Exchange. BDO is authorised to carry on investment business in the Republic of Ireland by the Institute of Chartered Accountants in Ireland.

davy bdo ireland

Get in touch

BES Management DAC
Fifth Floor,
Beaux Lane House,
Mercer Street Lower,
Dublin 2.
D02 DH60

Investors wishing to receive information in relation to The 2018 Davy EIIS Fund, please contact the Davy Execution Desk on 01 614 9000 or email besinfo@bes.ie

Companies wishing to receive further information about The Davy EII Tax Relief Fund can contact:

Andrew Bourg

For information on our BES Tax Advisory Services please view our Tax Advisory Page on the BDO website.

Warning: The information contained herein does not purport to be comprehensive, all inclusive or to contain all the information that a prospective investor might reasonably require in considering an investment in the Fund. It is strictly for information purposes only and must be read in conjunction with the Prospectus. This information does not constitute advice or a recommendation in any way. It does not take into account the knowledge and experience, investment objectives or financial situation of any particular person. The information contained herein is based on our understanding of current Irish tax legislation and Revenue guidelines. Prospective investors are advised to make their own independent commercial assessment of the information contained and obtain independent professional advice (including inter alia legal, financial and tax advice) suitable to their own individual circumstances, before making an investment decision, and only make such decisions on the basis of their own objectives, experience and resources.