On the first glance, It does not seem likely that the UK government would be that generous with its revenue. Nevertheless, these tax reliefs are available to investors in certain instances.
To be eligible for the relief, the company seeking the investment must have:
- A permanent establishment in the UK for a period of 3 years from the issue of the shares.
- All the money raised by the share issue must be used within two years in a ‘qualifying trade.’
- The trade must be carried on by the parent company or subsidiary which is a 90% subsidiary for a period of 3 years from the issue of the shares.
I guess the reasoning here is that if the company establishes a permanent establishment in the UK this must lead to some of the investment being made in this country which can only help better the economic prosperity of the country.
Spundge, a Canadian company, is currently raising EIS funds on www.crowdforangels.com. They have established a UK subsidiary and a London office as part of this process. Andrew Edwards of Spundge stated, “Raising investments for the UK subsidiary that is going to be responsible for driving forward its international development, through its London Office was made considerably easier with the availability of EIS tax relief for UK investors, to be able to invest via the Canadian Holding Company. That way investors can invest in the entire Spundge operation, including its intellectual property as well as all its international business.”
I am Canadian with EIS shares. What are my tax implications when I sell the shares?
Hello Karen,
It would depend on which jurisdiction you pay tax in. The EIS scheme is a tax relief scheme for UK taxpayers, so you would have to consider this first.
As for the implication of selling your shares, if you sell your shares within 3 years of purchasing them and have claimed the tax relief you would need to pay this relief back. If you sell your shares after 3 years, you do not need to pay the tax relief back (if you claimed it).
Depending on the sale price and if you made a profit on the sale of your shares, you would be liable to pay Capital Gain Tax on the profit you made. It is certainly worth speaking to a finance professional who specialises in tax.
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