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Seed capital scheme

  • 24-07-2012 10:21am
    #1
    Kaskade
    Registered Users, Registered Users 2 Posts: 366 ✭✭


    I've read the revenue document and this is my interpretation of the seed capital scheme. Have I got it right?



    In 2010 I earned €100K and paid €44K tax

    In 2012 I decide to set up a qualifying business, get approval from the enterprise board, take up employment and invest €100k in shares

    So for 2010 income earned 100k less 100k seed capital means I'm due a refund of €44K. Great I'm winning

    BUT I have now invested €100k in share capital into my limited company and the only way to remove that is to pay income tax so unless the business NEEDS the investment its not good tax planning?

    This is all hypothetical, 1. I didn't earn 100K in 2010 and 2. If I was going investing €100k I wouldn't be doing it on the advice of an internet forum !


Comments

  • #2
    deruler
    Registered Users, Registered Users 2 Posts: 17 ✭deruler


    Basically you make your investment, get your tax saving and in 5 years you sell the shares and hopefully get the amount of your investment back which will be tax free, any proceeds from sale of shares in excees of initial investment are then liable to cgt.

    If you sell your shares within the five year period the relief will be clawed back.

    There are alot of restrictions on the individual and the company but that is a simplified summary of the scheme. It has now been replaced by Employment Incentive Initiative (EII)


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