If you need to know how to claim EIS income tax relief and enjoy what is...
One unusual aspect of the SEIS scheme is that a foreign company can also benefit from the scheme.
We have helped a number of foreign companies to navigate their way through raising money using the SEIS and via a similar process for the EIS. This measure helps foreign companies to raise money from the UK and gives UK taxpayers a wider range of investment options.
SEIS Company Requirements
Before considering the specific rules for a foreign company it is important to recap the some of the other requirements a company must meet in order to qualify for the SEIS.
This includes the following:
- The company must be unquoted at the time of issue of the shares. AIM and PLUS Markets listed companies are eligible.
- The company must have fewer than 25 full-time employees (or part-time equivalents). If the company is the parent company of a group, that figure applies to the whole group.
- It must have no more than £200,000 in gross assets.
- The company must not have had any investment from a Venture Capital Trust (VCT), or issued any shares in respect of which it has submitted an EIS compliance statement.
- There is a restriction as to the amount of money it may raise under SEIS. It may not receive more than £150,000 in total under the scheme.
- It must be performing or planning to perform a qualifying business activity.
Other SEIS Conditions
Some of these conditions apply only at the time the relevant shares are issued. Others must be met continuously, either for the whole of the period from date of incorporation to the third anniversary of the date of issue of the shares, or in some cases, from date of issue of the shares to the third anniversary of their issue. If the company ceases to meet one or more of those conditions, investors may have their tax relief withdrawn.
The conditions also state that ‘the company must be UK resident, or have a permanent establishment in the UK’. For a foreign-based company to be considered to have a permanent establishment in the UK they must have a fixed place of business in the UK or have a UK representative who acts with satisfactory authority. The company is not required to have a UK subsidiary to use the SEIS.
Alternatively, a UK company can also have subsidiaries that are 90% or more owned by the UK company and qualify for the SEIS. This 90% subsidiary can be a foreign company. The exact requirements for a foreign company to qualify for the SEIS are complex. We would be happy to assist you in seeking advance assurance from HMRC thereby ensuring that everything is in order.
We can also assist foreign companies looking to use the EIS scheme. If you are a foreign company looking to find a different way of investment then we can help you. Get in touch with us in the office to arrange a free no obligation initial meeting.