THE EMPLOYMENT and Investment Incentive scheme, which is replacing the Business Expansion Scheme, has received state aid approval from the European Commission.

The Seed Capital Scheme has also received the green light from the commission.

Minister for Finance Michael Noonan yesterday welcomed the commission’s decision and said the incentives would ensure that tax relief is fully targeted at job retention and creation.

Dublin Chamber of Commerce also welcomed the approval of the EII scheme, saying that it will enable a much broader range of companies to access investment capital, as it is more flexible than the BES scheme.

Two new EII funds were unveiled yesterday in the wake of the commission’s decision. Davy and BDO will launch a joint venture to provide EII funding to companies on November 30th, while BVP Investments has launched a simple.ie green fund which will be a designated EII scheme fund.

The EII scheme provides tax relief of 30 per cent on investments of up to €150,000 a year in companies. Additional relief is available if jobs are created, or the company uses the capital raised for research and development.

The Seed Capital Scheme incentivises the establishment of new companies by providing tax refunds to individuals who start their own venture.

The commission has granted approval for both schemes, subject to a small number of changes being made to the relevant legislation. Mr Noonan intends to provide for these changes in Finance Bill 2012.

BES relief will still be available for shares issued on or before December 31st, 2011, but the scheme will then come to an end.

The EII and SCS incentives will be available in respect of eligible shares issued from yesterday to the end of 2013.