The Office of the Revenue Commissioners provides a number of supports and initiatives to assist start-up businesses and small and medium enterprises. Initiatives include tax incentives – tax reliefs, deductions and exemptions as well as supports and other initiatives. These may differ depending on the type of business and the stage of development of the business.
Revenue provides information and support under three headings:
- A comprehensive range of information and guidance on the Revenue website (www.Revenue.ie) on taxation issues and Revenue requirements relating to starting and running a business, including the Revenue Online Service (ROS)
- Supporting Job Creation and other Enterprise Supports
- Tax Simplification Initiatives for Smaller Businesses
Revenue website and Revenue On-Line Service (ROS):
The Revenue website contains a comprehensive range of information and guidance regarding Revenue requirements for starting or running a business.
The “Starting and Running a Business” Section contains information on registering for tax, a summary of the main business taxes, how to account for tax as a sole trader or as a company, the requirement to keep books and records, tax clearance issues, how to pay tax ,etc.
The Revenue On-Line Service (ROS) is an internet based facility which provides Irish businesses with a free, secure, confidential, and easy to use service to conduct their Revenue related transactions 24 hours a day, 365 days a year. At the touch of a button ROS customers can pay and file returns electronically for more than 22 different taxes and duties.
Forms are simple, user friendly and intuitive to complete and have no duplication. The availability of an immediate and accurate calculation facility for complex and lengthy tax returns provides significant savings for customers. The validation checks minimise errors and reduce the need for further correspondence with Revenue. Once a form is validated and transmitted to ROS, an instant acknowledgement is sent to the customer’s ROS inbox. Returns are processed automatically within days of filing. This faster processing of returns leads to speedier repayments.
ROS is Revenue’s preferred channel for business customers to transact their tax affairs. Mandatory use of ROS to is part of Revenue’s strategy to establish the use of electronic channels as the normal way of conducting tax business. With effect from 1 June 2014 all new businesses are required to pay and file using ROS. From 1st January 2015 all newly registering Income Tax cases will become mandatory efilers and epayers.
The ROS section of the website provides step-by-step instructions on how to register for and how to use ROS
Supporting Job Creation and other Enterprise Supports:
Tax reliefs, deductions and exemptions that aim to contribute towards job creation, which may be of particular interest to LEO clients and contacts, include the following:
- The Start Your Own Business Relief provides for relief from Income Tax for long term unemployed individuals who start a new business. It provides an exemption from Income Tax up to a maximum of €40,000 per annum for a period of 2 years to individuals who set up a qualifying business. You may qualify for this relief if you have been unemployed for 12 months or more and during that period you were in receipt of one of a range of Dept. of Social Protection payments or crediting contributions. Business must be set up between 25 October 2013 and 31 December 2016.
- Startup Refunds for Entrepreneurs (SURE) is aimed at those in PAYE-type employment wishing to set up and take up employment in their own (qualifying) business and in doing so, avail of this tax relief incentive scheme. It allows them to invest in their new company and claim up to 41% of their investment back from PAYE they have paid over the previous six years. If you start up and work full-time in your own company and you invest equity into the company (subscribed as shares), you may be entitled to a refund of same or all of the income tax you paid in the previous six years. The amount of relief is restricted to the amount of the investment. Since November 2011, the scheme is open to a much wider range of sectors and the ceiling on investment is now €100,000 in the current year and each of the six look back years.
- The Employment and Investment Incentive is a tax relief incentive scheme that provides tax relief for investment in certain corporate trades, aimed at new and existing SMEs. It is designed to help SMEs attract investors into their companies. Companies receive capital to grow their business. Investors receive up to 30% of their investment back initially and a further 10% relief may be available at a later date.
- Relief from Corporation Tax for start-up companies. This scheme provides relief from corporation tax on the trading income and certain gains of start-up companies that have commenced a new trade. It provides relief in respect of the first 3 years of trading. The value of the relief is linked to the amount of employer’s PRSI paid by the company, subject to a maximum of €5,000 per employee and an overall limit of €40,000. Companies with a total corporation tax liability of up to €40,000 in a year can qualify for the relief. Therefore, a company with trading profits subject to the 12.5% rate of up to €320,000 (and no other profits) in a year would be eligible for full relief. Marginal relief on a tapering basis is available where the corporation tax liability for the accounting period is between €40,000 and €60,000. Where a start-up company has insufficient profits to claim the relief in a given year, any relief unclaimed in the first three years can be carried forward for use against future corporation tax liabilities.
- The Research and Development Tax Credit This is a valuable tax-based incentive that is designed to encourage investment in R&D by companies in Ireland. A 25% tax credit for qualifying Research and Development expenditure exists for companies engaged in qualifying research and development undertaken within the European Economic Area. This credit may be set against a company's Corporation Tax liability. The first €300,000 of all qualifying R&D expenditure incurred in 2014 will benefit from the full 25% R&D tax credit. This is of particular benefit to SMEs. For larger R&D expenditure, the tax credit will continue to apply only to the amount by which expenditure in 2012 exceeds that incurred in the base year 2003, for all accounting periods concluding on or before 31 December 2014. For accounting periods commencing on or after 1 January 2015, the requirement to take account of 2003 base year expenditure is removed. Therefore, all qualifying R&D expenditure incurred from 1 January 2015 will be fully eligible to avail of the 25% credit.
Tax Simplification Initiatives for start-ups and SMEs:
Revenue also has a range of other supports for small and medium businesses: The supports include less frequent filing and payment arrangements for certain taxes, exemption from the requirement to register for VAT provided turnover does not exceed certain thresholds, use of the cash basis of accounting for VAT, and deferral of the Corporation Tax preliminary due date. These supports reduce the compliance burden and assist with cash-flow for SMEs.
Detailed information on all of these supports, initiatives and reliefs is available on www.revenue.ie