Start up CT exemption

Yes, once certain criteria are met, then a new start up company is exempt from tax on trading profits and certain gains for the first three years of trading subject to maximum relief of €40,000 per year. This means that over the three year period the company could potentially earn €960,000 tax free!

However there are a number of conditions which need to be adhered to in order to claim the relief.

The main conditions attached to the relief are as follows:

• It must be a brand new business, it cannot be a business which had traded previously under a different name or different ownership
• The amount of relief you can claim is capped at the amount of employers PRSI paid by the company during the course of the year. Therefore if you have only a small number of employees then the amount of the relief that you can claim will be restricted.
• Not all types for business qualify for the tax exemption, companies which undertake professional services are not eligible to claim the relief for example

In practice many new start-ups will be loss making in the initial years of trading. One main advantage of this relief is that you can carry forward any unused relief to future years to reduce your tax bill in those years – it is not a use it or lose it relief!

Date published 22 Apr 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.