EIIS vs pension contributions: how the tax reliefs compare

By BVP Investments Ltd · Last reviewed 3 November 2026

Pension contributions and EIIS investments both reduce your Irish income tax, but they work differently. Pension relief is given at your marginal rate within age-related limits, and the money is usually locked away until retirement. EIIS relief is a percentage of the amount invested, with a minimum four-year holding period, and the money is invested in unquoted Irish companies, so capital is at risk.

Side by side

	Pension contribution	EIIS (BVP 2026 EII Fund)
Tax relief	At your marginal rate, up to 40%	35% blended target for the fund, depending on how each company is categorised
Limit	15% to 40% of earnings depending on age, on earnings up to €115,000	Relief on up to €1 million a year across the Part 16 reliefs; fund maximum €1 million
Access to money	Generally not until retirement	Minimum 4 years; fund term expected 4 to 7 years; no early exit
Growth	Grows free of tax inside the pension; taxed when drawn down	Gains on exit are subject to Capital Gains Tax
Investment risk	Depends on the funds chosen	High: unquoted, early-stage and growing companies, illiquid, capital at risk
Income it can be claimed against	Relevant earnings (employment or self-employment income)	Total income, including PAYE, rental, investment and pension or ARF income

Why some investors use both

Pension relief is limited by age and by earnings, and it cannot be claimed against rental income, investment income or ARF drawdowns. Investors who have already used their pension allowance, or whose income comes mainly from those other sources, sometimes look at EIIS as an additional way to reduce income tax. EIIS carries much more risk than most pension funds and ties money up for at least four years, so it suits only people who can afford to lose the capital invested.

Which suits you depends on your age, income, existing pension provision, risk appetite and need for access to the money. Speak to a regulated financial adviser or tax adviser before deciding.

Frequently asked questions

Is EIIS better than a pension contribution?

Neither is better in general. Pension relief is at your marginal rate within age-related limits and the money is locked until retirement. EIIS relief targets 35% blended for the BVP 2026 EII Fund, money is tied up for at least four years and capital is at risk. Many investors consider EIIS only after using their pension allowance.

Can I claim EIIS relief against rental or ARF income?

Yes. EII relief is deducted from total income, which includes rental income, investment income and pension or ARF income. Pension contribution relief is limited to relevant earnings.

What are the pension contribution limits in Ireland?

Revenue sets age-related limits of 15% of earnings under 30, 20% for 30 to 39, 25% for 40 to 49, 30% for 50 to 54, 35% for 55 to 59 and 40% for 60 and over, on earnings up to €115,000 a year.

Can I use both EIIS and pension relief in the same year?

Yes, provided you meet the conditions for each and have enough income tax liability to use the relief. Get tax advice on your own position.

Related guides

Capital at risk. Tax relief depends on individual circumstances and Revenue rules. Minimum 4-year holding period. EII investments are in unquoted, early-stage and growing companies and are illiquid. Past performance is no guarantee of future returns. This page is general information, not tax or investment advice.