Three Year Tax Exemption for Start-up Companies

October 12, 2011

Partner, Head of Tax

Relief from corporation tax for new start-up companies for the first three years of trading was first introduced in Finance (No. 2) Act 2008.  The relief is available for new companies which are:

• incorporated on or after 14 October 2008
• commence a “qualifying” trade after 2009 – it should It should be noted that a qualifying trade does not include a trade which was previously carried on by another person and to which the company has succeeded.
• whose corporation tax liabilities do not exceed the specified levels – the corporation tax payable for an accounting period should not exceed €40,000, with marginal relief available where total corporation tax payable is between €40,000 and €60,000.

Finance Act 2011 extends this relief to companies which commence a new trade in 2011.  In addition, it modifies the existing relief so that the value of the relief will be linked to the amount of employers’ PRSI paid by a company.  The purpose of these changes is to better target the relief at start-up companies generating employment.

For further information about how your company might benefit from tax relief contact Rory Meehan, Partner, Head of Tax Department at RSM Farrell Grant Sparks.

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