Why EIIS Still Makes Sense — and Why a Fund Approach Is Often Smarter

The Irish government recently introduced a number of changes to EIIS. While at first glance some adjustments may appear less favourable, the revamped scheme still presents a compelling opportunity — especially if you invest via a professionally managed EIIS fund rather than directly into individual companies.

What’s Changed in EIIS

• From 1 January 2024, EIIS moved from a flat-rate tax relief to a tiered relief structure, with relief rates now depending on the type of company and its stage of development. Pre-revenue companies — those that have not yet started trading — qualify for up to 50% relief.

• Meanwhile, for companies recently trading (e.g. fundraising within 7 years of first sale) or in follow-on funding rounds, relief tends to be lower (e.g. 35% or less, depending on stage).

• Importantly, the annual investment cap for EIIS has increased significantly — investors can now invest up to €1 million per annum.

• Also, the scheme’s lifetime was extended (originally set to expire end-2024) and now runs until at least 31 December 2026.
  

In short: the rules have been tweaked, but EIIS remains a powerful tax-efficient vehicle for investing in Irish SMEs.

Why That Still Makes EIIS Attractive

• Generous upfront tax relief — For early-stage investments, up to 50% of your capital can be offset against your income tax liability, which substantially reduces your effective risk from the outset.

• High new investment cap — With the €1 million per year allowance, EIIS becomes accessible not only to those investing smaller amounts, but also to more substantial investors seeking meaningful allocations.

• Support for Irish SMEs & economy — By investing in EIIS, you’re helping homegrown companies raise capital, grow, create jobs, and innovate — supporting sustainable economic growth.

• Added upside potential — If an investee company succeeds, there’s potential for significant equity value appreciation beyond just the tax relief.
  

All in all, EIIS remains among the most attractive tax-efficient investment routes available to Irish investors who want to back domestic SMEs.

Why Invest via an EIIS Fund Rather Than Directly in Individual Companies

Direct investment into a single SME may seem appealing — especially if you believe strongly in its potential — but it carries high risk: the success or failure of your entire investment depends on that single company. A professionally managed EIIS fund, on the other hand, offers several important advantages:

• Diversification = risk mitigation A fund spreads your investment across a portfolio of companies. This means that while some companies may fail, others may succeed — improving your overall odds of a good outcome.

• Professional selection & management Funds are managed by experienced teams who evaluate companies, monitor performance, and make follow-on funding decisions. This improves your chance of backing companies with real growth potential — rather than relying on your own (potentially limited) ability to pick winners.

• Administrative convenience By investing via a fund, you receive consolidated EIIS relief documentation (e.g. one EIIS certificate), easing your reporting and tax-return process. Many funds handle compliance, paperwork, and liaising with tax authorities.

• Access to broader deal flow A fund may invest across sectors — tech, renewable energy, manufacturing, services — giving you exposure to a diversified economy. It may also access deals that individual investors could not realistically reach (due to scale or expertise).

• Better risk/return balance Given the inherent uncertainties with SMEs (illiquidity, business risk, exit timing), a fund balances potential high return from some investments with loss-absorption from others. This tends to deliver a smoother, more manageable investment journey.
  

In short: a fund gives you the benefits of EIIS — tax relief, supporting SMEs, potential upside — while significantly reducing the risk and burden associated with selecting and managing individual companies yourself.

Why the Recent Changes Actually Reinforce the Case for Funds

Some commentators have cautioned that the tiered tax-relief structure might make EIIS less attractive for individual “follow-on” investments. But that concern is often overstated when you view EIIS from the perspective of a diversified fund:

• Because funds typically invest across companies at different stages — early, growth, follow-on — the blended portfolio still benefits from high-relief opportunities (e.g. 50% for early stage), while smoothing the overall risk profile.

• The higher annual investment limit (€1 million) reduces constraints for substantial investors — you can build a meaningful allocation via a fund without hitting restrictive caps as quickly as before.

• The extension of the scheme’s duration gives both funds and investee companies more runway to plan, invest, and deliver returns — which is especially valuable given the long-horizon nature of SME growth and exits.
  

Therefore, the “new EIIS” arguably improves the attractiveness of a fund-based approach — offering scale, flexibility, and diversified exposure — while preserving upside and tax efficiency.

Conclusion: EIIS — Still One of Ireland’s Best Tax-Efficient Investment Tools

The recent changes to EIIS may have altered some of the mechanics, but they haven’t changed the fundamentals: EIIS remains a uniquely powerful way to combine tax relief with support for Irish SMEs and potential equity upside.

For many investors — especially those seeking to balance risk and return, minimise administrative burden, and diversify — investing via a professionally managed EIIS fund is often a smarter, more efficient way to go than trying to pick individual companies.

If you are looking to support Irish innovation while achieving tax-efficient growth and reduced portfolio risk — a well-structured EIIS fund remains one of the most compelling tools available.

Learn more about investing in EIIS in 2025 here.