Irish Tax Exemption for Start Up Companies

The exemption from corporation tax and capital gains tax for certain trading start up companies in 2009, has been extended to new start ups companies which commence trading in 2010. The exemption applies for three years and is subject to certain anti-avoidance provisions.

How the exemption works

Qualifying companies will be exempt from Irish corporation tax and capital gains tax in each of their first three years of trading provided their tax liability does not exceed €40,000 per annum. In essence, this exemption enables a company to generate trading profit of €320,000 per annum before incurring a tax liability.

Marginal relief will be available in circumstances where an entity’s tax liability is between €40,000 and €60,000. Where the tax payable is €60,000 or more there will be no relief on any of the profits.

This exemption will only be available to companies incorporated after 14th October 2008 that commenced trade in either 2009 or 2010. The exemption is not available to companies carrying on trades which are taxable at the higher rate of 25% (this applies to companies in receipt of income generated through a foreign trade, i.e. agency structures). In addition, it will not apply where a company transfers an existing trade to a connected person.