The Venture Capital Investment Tax Credit program improves access to capital for fast growing Indiana companies by providing individual and corporate investors an additional incentive to invest in early stage firms. Investors who provide qualified debt or equity capital to Indiana companies receive a credit against their Indiana tax liability. The Venture Capital Investment Tax Credit is established by I.C. 6-3.1-24.
Calculation of Credits
The maximum amount of tax credits available for qualified investment capital to a particular qualified Indiana business equals the lesser of: The total amount of investment capital provided to the qualified Indiana business in the calendar year, multiplied by 20 percent or $1,000,000. If the amount of credit exceeds the taxpayer’s state tax liability for that taxable year, the taxpayer may carry over the excess credit for a period not to exceed the taxpayer’s following five taxable years. A taxpayer is not entitled to a carryback or a refund of any unused credit amount.
This credit is open to approved taxpayers and pass through entities. A business must first be certified by the IEDC as a Qualified Indiana Business. Next, the investor must submit a capital investment application for approval by the IEDC prior to making an investment. After the investment application is approved, the taxpayer may make a qualifying investment and submit supporting documentation to the IEDC for the investment to be certified. The taxpayer’s investment must be made within two years after the date on which the IEDC approves the investment plan.
Any current investor who or which holds a majority ownership position prior to the proposed investment in the Qualified Indiana Business generally is not eligible for the VCI tax credit. Any current investor who or which, as a result of making the proposed investment, will hold a majority ownership position generally is eligible for the VCI tax credit for the investment portion up to 50% ownership position. An investor who or which does not hold any ownership position, and does not have a potential ownership position of any kind, prior to making the proposed investment generally is eligible for the VCI tax credit on the entire proposed investment regardless of proposed ownership position.
An investor may be an individual or an entity. An investor holds an ownership position when such investor (1) could potentially derive a financial benefit from a tax credit when another investor claims such tax credit, or (2) has tacit or express control over the interests of another investor in the Qualified Indiana Business, and in either such case the combined interest of those investors constitutes an ownership position in the Qualified Indiana Business. For the purpose of clarity, such benefit or control shall automatically be presumed to be associated with an individual investor in the following circumstances: (a) with respect to the spouse and unemancipated children of such individual investor; (b) with respect to any trust, family limited partnership, family limited liability company or other estate planning entity, the beneficiaries, partners or members of which include such individual investor or such individual investor’s spouse or unemancipated children; and (c) with respect to any partnership, corporation, limited liability company, joint venture, association, trust, or other such organization in which such individual investor possesses any ownership interest.
Debt investments from financial institutions secured by a valid mortgage, security agreement or other agreement or document that establishes a collateral or security position for the financial institution that is senior to all collateral or security interests of other taxpayers that provide debt or equity capital to the Qualified Indiana Business do not qualify for VCI Tax Credits. Further, debt investments may not qualify to the extent that principal be paid or repaid prior to the expiration of a period of at least thirty-six (36) months.
You may now submit your application online via our Project Information Management System (PIMS). It is through this system that you can access both the Qualified Capital Investment Application (QCI) and Qualified Indiana Business Application (QIB).
Pursuant to IC 6-3.1-24-7(d), the IEDC may impose an application fee of not more than two hundred dollars ($200) upon those companies that submit the QIB application. The IEDC is not charging an application fee at this time.