Startups may benefit from the government’s recently extended tax relief in effect through the end of 2021. Under the Start-up Capital Incentive (SCI) scheme, enacted as part of Ireland’s Budget 2019, companies may qualify for up to €500,000 in tax relief if they:
- are a micro-enterprise, within the meaning of Annex 1 of the General Block Exemption Regulation, and
- exist solely for the purpose of carrying on a qualifying new venture.
Qualifying companies may not:
- have commenced carrying on, or made preparations for the carrying on of, any trade or business more than seven years prior to the share issue date, or
- have any partner business or linked business.
The funds raised must be used:
- within four years of the share issue;
- to carry out relevant trading activities;
- if the company has not begun carrying out relevant trading activities, for research, development and innovation; and
- to contribute to the salaries or job creation.
Minister for Finance and Public Expenditure and Reform Paschal Donohoe announced the tax relief for startups during his statement regarding Budget 2019 in October, 2018. “This Government recognises the value of SMEs to the economy and to job creation. In light of this, I am legislating to extend the three year tax relief for certain start-up companies until the end of 2021,” he said.
It should be noted that any potential tax relief would not reduce PRSI or USC and is a deduction from total income. For startups to be eligible to obtain tax relief, the company must provide proof of its qualification and other information to the Revenue Commissioners, with which an experienced business law Solicitor should assist.
