Revenue have published a guide outlining the tax reliefs, deductions and exemptions that contribute towards the creation of jobs.
There are a number of schemes available:
The Start Your Own Business scheme provides for relief from Income Tax for long term unemployed individuals who start a new business. The scheme will provide an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business having been unemployed for a period of at least 12 months prior to starting the business.
Relief from Corporation Tax for new start-up companies for the first three years of trading is provided for in section 486C of the Taxes Consolidation Act 1997. The relief is provided in respect of profits of a new trade and chargeable gains on the disposal of assets used in the trade. Relief applies where the total Corporation Tax payable for an accounting period does not exceed €40,000, with marginal relief available on a tapering basis where total Corporation Tax payable is between €40,000 and €60,000.
Startup Refunds for Entrepreneurs (SURE) – If you are an employee, an unemployed person or were made redundant recently and are interested in starting your own business you may be entitled to avail of the tax refund available under SURE. An unemployed individual or an employee who leaves employment and invests by means of shares in a company, which carries on a new business, may claim a refund of income tax paid in previous years.
Employment and Investment Incentive (EII) – The scheme allows a qualifying individual who makes a qualifying investment (maximum €150,000 for any one year) in a qualifying company to deduct thirty fortieths (i.e. 30/40) of the cost of the investment from their total income in the year of the investment. A further deduction of ten fortieths (i.e. 10/40) of the cost of the investment will be allowed if, after a three year holding period, the company has increased its number of employees or has increased its expenditure on research and development.
Retraining Relief – Where, as part of an employee’s redundancy package, his/her employer incurs the cost of retraining him/her – for example, so as to improve his/her job prospects after being made redundant – then the first €5,000 of the cost of such retraining will not be taxable in the hands of the employee being made redundant.
Certain employment grants and recruitment subsidies to be paid tax free – Section 226 Taxes Consolidation Act 1997 provides that certain employment grants or recruitment subsidies paid to an employer who employs a person or persons under certain employment schemes are to be disregarded for all the purposes of the Tax Acts.
Film Relief scheme provides relief in the form of a corporation tax credit related to the cost of production of certain films. The credit is granted at a rate of 32% of the lowest of: 1. eligible expenditure (expenditure incurred by the qualifying company on the employment of eligible individuals or on goods, services or facilities within the State on the production of a qualifying film), 2. 80% of the total cost of production of the film, 3. €50,000,000. • The minimum amount that must be spent on the production is €250,000 and the minimum eligible expenditure amount to qualify is €125,000.
Research and Development Tax Credit – A tax credit of 25% is available on incremental R&D expenditure incurred on trading expenses and plant and machinery. The credit is given at a rate of 25% on qualifying R&D expenditure. This R&D tax credit is in addition to the normal 12.5% deduction for trading expenses and capital allowances.
Special Assignee Relief Programme (SARP) SARP provides for income tax relief on a proportion of income earned by an employee who is assigned by his/her relevant employer to work in the State for that employer (or for an associated company in the State of that relevant employer). The company assigning the employee must be incorporated and tax resident in a country with which the State has a double taxation agreement or a tax information exchange agreement. Where certain conditions are satisfied, an employee can make a claim to have a proportion of his/her earnings from the employment with the relevant employer (or with an associated company) exempt from income tax. The Special Assignee Relief Programme works by exempting 30% of an employee’s income from the employment. For the years 2012, 2013 and 2014, the exempted proportion is 30% of the employee’s income between €75,000 and €500,000. For 2015, and subsequent years, the exempted proportion is 30% of an employee’s income over €75,000.
Foreign Earnings Deduction is designed to assist indigenous companies seeking to expand into emerging markets. Employees or directors working for specified periods in the identified emerging markets can avail of an income tax deduction. The amount of the deduction will depend on the number of days worked in a relevant state/s and the relief is granted by providing a proportional deduction from income based on the number of qualifying days worked in such relevant states. The maximum amount of the deduction cannot exceed €35,000 in any tax year.
The Home Renovation Incentive provides tax relief for homeowners and landlords by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on the home or rental property.
Retirement Relief – Capital Gains Tax – This is a relief from capital gains tax in the case of an individual aged 55 or over on the disposal of all or part of his or her farming or business assets. In general, the assets concerned must be owned and used by the individual for farming or business purposes for a minimum period of 10 years prior to the disposal of those assets.
Entrepreneur Relief – Capital Gains Tax – This relief is aimed at encouraging entrepreneurs to reinvest the proceeds of a disposal in new businesses. The relief is in the form of a tax credit against any capital gains tax liability on the future disposal of chargeable business assets of the qualifying enterprise made more than 3 years after they were acquired.
Agricultural Relief & Business Relief – Capital Acquisitions Tax (gift and inheritance tax) – Special treatment is afforded both to Business property and to Agricultural property on the transfer of those assets to the next generation by way of gift or inheritance. The market value of Business property and Agricultural property may be reduced by 90% for tax purposes provided certain conditions are met while the annual tax-free threshold is also available for offset against the reduced value. The aim of these reliefs is to encourage entrepreneurial activity and also to avoid a possible forced sale of trading entities in order to pay significant CAT liabilities.
The full guide from Revenue is available HERE