Tax Exemption For Start-Up Companies

thecleverone

Hi everyone

I just thought i'd do up a quick post in relation to the above. In the budget 2009, in an attempt to encourage new companies to start up, a three year remission from corporation tax and CGT for NEW companies with a tax liability of less than €40,000 was announced. Companies that qualify will be fully exempt from paying corporation tax on trading profits where the total amount of corp tax does not exceed €40,000 in each of the first three years in business.

Some conditions apply such as
The company must be incorporated on or after 14 Oct 08
The company must commence trading before 31 December 09
Must be a new business (not sole trader re registering as ltd co)
Does not apply to professional services etc

Just posting as obviously this is getting time sensitive now as new companies must be registered with CRO and with Revenue and have begun trading by 31 Dec 09. Just thought it might incentivise people who are holding off till Jan to start their own business to think about getting the formalities done before end of Dec

TCO

egan007

Sketchy conditions- And hard to find out info on it.

Say a sold trader makes websites but starts a new business making web applications.
Is that new?

To a pro they are completely different to the taxman they are more or less the same.

Howjoe1

thecleverone wrote: »

Hi everyone

I just thought i'd do up a quick post in relation to the above. In the budget 2009, in an attempt to encourage new companies to start up, a three year remission from corporation tax and CGT for NEW companies with a tax liability of less than €40,000 was announced. Companies that qualify will be fully exempt from paying corporation tax on trading profits where the total amount of corp tax does not exceed €40,000 in each of the first three years in business.

Some conditions apply such as
The company must be incorporated on or after 14 Oct 08
The company must commence trading before 31 December 09
Must be a new business (not sole trader re registering as ltd co)
Does not apply to professional services etc




Just posting as obviously this is getting time sensitive now as new companies must be registered with CRO and with Revenue and have begun trading by 31 Dec 09. Just thought it might incentivise people who are holding off till Jan to start their own business to think about getting the formalities done before end of Dec

TCO

I was aware of this but last time I checked the implementation was subject to a ministerial order. Has this been written it the legislation?

Agree with other post that info is sketchy. Can we take it as done and dusted?

thecleverone

It's pretty much done and dusted to be honest with you. We're all ready from our side but as it falls under state aid regulations, we're waiting on the go ahead from the EU. It's effectively not been written into legislation, which is stupid considering that the deadline for the scheme will have passed before its enacted but it should be signed in very shortly.

Also on another note, according to the Commission Taxation Report, there are whispers that they may extend the deadline past 31 December, but as this is currently heresay, i'd say anyone wishing to avail of this should register asap just in case.

It's not a case of if this will be enacted but more of a case of when.

dbran

egan007 wrote: »

Sketchy conditions- And hard to find out info on it.

Say a sold trader makes websites but starts a new business making web applications.
Is that new?

To a pro they are completely different to the taxman they are more or less the same.

From the last time I read up on this it has to be a brand new business. just switching your business from a sole trader to a limited company as in your example will not work.

Also if you have an existing company that starts up a new business as well as carrying on the old one then there are provisions that allow that proportion of new business to avail of the exemption.

But one should also factor in the other things that make sole traders better then companies before making your decision and not base it on CT alone ie cost, audit, cro, legislation, ODCE, red tape, etc

After all you may have no ct to pay but how are you going to get all that lovely profit out without paying a salary, dividend etc and therefore PAYE and income tax.



Kind Regards


Dbran

Howjoe1

thecleverone wrote: »

It's pretty much done and dusted to be honest with you. We're all ready from our side but as it falls under state aid regulations, we're waiting on the go ahead from the EU. It's effectively not been written into legislation, which is stupid considering that the deadline for the scheme will have passed before its enacted but it should be signed in very shortly.

Also on another note, according to the Commission Taxation Report, there are whispers that they may extend the deadline past 31 December, but as this is currently heresay, i'd say anyone wishing to avail of this should register asap just in case.

It's not a case of if this will be enacted but more of a case of when.

Thanks for that. Our company was incorporated on 24th November 2008 which is in the correct timeframe for set up. However we carried out staff training after the 26th December 2008 which include a few days trading as part of this. I am worried that this might exclude us on the basis that we traded in 2008, albeit for 2/3 days. It would be harsh if that is the case. Are you aware if the finer details>

Robert`

Bumping this back up.

I read online that the 2010 finance act includes the same provision re. corporation tax / CGT for companies with an annual turnover under 320,000 EUR.
But is this still not applicable to professional services etc? I found no mention of this and it'd be great if this bit was scrapped (so I could avail of it when starting my ltd next month )

I'll be working in IT consultancy.