SWEDISH CHAMBER OF COMMERCE TAX INCENTIVES FOR BUSINESS GERRY VAHEY 11 April 2013.
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SWEDISH CHAMBER OF COMMERCETAX INCENTIVES FOR BUSINESSGERRY VAHEY11 April 2013
TABLE OF CONTENTS
1. Corporation Tax Rates, Losses, deductions etc
2. Start up Exemption
3. Holding Company – Participation Exemption
4. Research & Development Tax Credit
5. EIIS & Seed Capital Relief
6. Assignment Relief (“SARP”)
7. Foreign Earnings Deduction (“FED”)
8. Other Issues
2
CORPORATION TAX - GENERAL
• 12.5%, 25%
• Tax deduction for most items of expenditure
• Incorporation versus Sole Trade
• Intangible Assets
3
• Overview
• Relief from Corporation Tax
• First 3 years Profits
• Incorporation and Commencement
• Employment Based Relief
START UP EXEMPTION
• The Relief
• Relief of up to €40,000
• Marginal Relief to €60,000
• Trading Profits
• Carry forward of losses
START UP EXEMPTION
HOLDING COMPANY – PARTICIPATION EXEMPTION
6
HoldCo
Trade Co
RESEARCH & DEVELOPMENT TAX CREDIT
• 25% Tax Credit
• Offset against Corporation Tax
• Refunded over 3 years
• Reward key employees
COMPANY TAX CREDIT €60,000
RDTCYear 1Refund
Year 2Refund
Year 3Refund
Year 4Refund
Year 1 20,000 20,000 20,000 -
Year 2 - 20,000 20,000 20,000
Year 3 - - 20,000 20,000
Year 4 - - - 20,000
20,000 40,000 60,000 60,000
DIRECT R&D EXPENDITURE
Direct Staff Costs
Raw Materials
Direct Over-headsComputer Software &
Hardware costs
Sub Contracted R&D Costs
(Rules)
Plant & MachineryBuildings
(Special Improved Rules Apply)
Fixtures & Fittings
Other ?
SOME….QUALIFYING ACTIVITIES
prototyping design trials testing moulding workings drawings failed attempts
recipes blending reaction
extensive testing process &
output performance Stability
control
first batch scale up
production clinical trials
process & output improvements
Algorithm & OS development statistical data management generic software improvements
Qualifying Activities
SOME …. QUALIFYING ACTIVITIES (BROWN COAT?)
Process Improvements : Definable Increases in Output, Volume, Running Time etc
Automation
MONEY BACK FROM REVENUE
• Reliefs
• Employment and Investment Incentive Scheme (EIIS)
• Seed Capital Relief
• Start-up Relief
• How these interact with
• R&D Tax Credit
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
• Benefits
• Cash for Company
• Income Tax Relief for Investor
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
• The Company
• Trading company
• Unquoted
• Residence & Incorporation
• Micro, Small and some Medium Sized Enterprises
• Max Lifetime limit of €10m
• Max Annual limit of €2.5m
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
• The Investor
• Resident in Ireland
• Hold shares for 3 years
• Not connected to company
• Relief of €150,000 in any one year
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
• Tax Relief
• Initially - 30%
• After 3 years - 11%
EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)
• Practical Issues
• EIIS Investors
• EIIS Funds
• Exit Strategies?
SEED CAPITAL RELIEF
SEED CAPITAL RELIEF
• Key
• Employment in last 6 years?
• Paid PAYE on Employment Income?
• Entitled to Income Tax Refund?!!
SEED CAPITAL RELIEF
• The Relief
• Refund of Income Tax
• Max of €100k per annum
• Previous 6 years
SEED CAPITAL RELIEF
• Conditions
• Investment in Shares
• Qualifying Company
• Creation of Employment
• Qualifying Employment
ASSIGNMENT RELIEF “SARP”
• Inbound employees
• Exempt 30% of income - €75K to €30K
• Relevant Employee
23
FOREIGN EARNINGS DEDUCTION
• Outbound workers
• BRICS + Others
• Max relief is €35K
• Dependent on number of days
24
OTHER ISSUES
• Double taxation network
• Ease of administration
• Expansion abroad
• Remittance Basis
• Revenue Audits
25
mazars.ie
CONTACT
Mazars
Harcourt Centre Block 3, Harcourt Road
Dublin 2, IrelandTel: +353 (01) 4494400Email: mazars@mazars.ie
Mazars Place, Salthill
Galway, IrelandTel: +353 (091) 583242Email: mt@mazars.ie
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