SWEDISH CHAMBER OF COMMERCE TAX INCENTIVES FOR BUSINESS GERRY VAHEY 11 April 2013.

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: [email protected]

Mazars Place, Salthill

Galway, IrelandTel: +353 (091) 583242Email: [email protected]