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| Tax Exemption for Start-Up Companies |
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In an attempt to encourage the establishment of new companies a three year remission from taxation from profits and capital gains for companies with a tax liability of less than €40,000 per annum was announced in Budget 2009. The aim is to provide a stimulus for entrepreneurs in a challenging commercial environment.
Companies that qualify will be fully exempt from corporation tax on trading profits and chargeable gains on the disposal of assets used for the new trade where the total amount of corporation tax does not exceed €40,000.
At the current rate of corporation tax i.e. 12.5% this equates to €320,000 of profits per year. Where corporation tax for the period is between €40,000 and €60,000, marginal relief will apply. No relief is available where corporation tax liability for the period exceeds €60,000.
This relief will apply for three years from the commencement of the new trade. Therefore, the company could shelter from tax up to €960,000 of trading profits over a three year period. |
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| (i) The following conditions apply for companies that commenced to trade during 2009 or 2010: |
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 | The company must be incorporated on or after 14th October 2008.
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| The trade must be a new trade and must not have been carried on previously by another person in the State. |
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| The tax relief will apply for three years from the commencement of the new trade. |
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| The tax relief does not apply to companies that are dealing in land or petroleum and mineral activities. |
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| The tax relief does not apply to professional service companies |
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| The tax relief for companies operating in the road transport sector is restricted to a total of €100,000 over the three year period. |
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| (ii) For companies that have an accounting period commencing in 2011 |
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| The tax relief is linked to the amount of employers PRSI that the company has paid. The maximum credit that can be claimed is €5,000 per employee. |
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| The maximum amount of corporation tax relief is €40,000 per annum for 3 years. |
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| If you require more information in relation to this matter please email or call us on 01 6120580 today. |
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