Ireland is regularly named as being one of Europe's most entrepreneurial countries[2]. Situated in the heart of the business world, Ireland has developed a vibrant start-up community as well as world-class accelerators in software, fintech, medtech and the Internet of things.
Irish start-ups, similar to their European and transatlantic counterparts, often face obstacles relating to scaling and development. One of the biggest difficulties start-ups and early stage companies face is access to finance.
With this in mind, we look at some of the financial supports and tax reliefs currently available for start-ups and early stage businesses in Ireland to accelerate growth and potentially stimulate the next generation of gazelles.
- Financial Supports
Enterprise Ireland offers a number of financial supports based on the development stage and the funding needs of the business:
- High Potential Start-Up Funding (HPSU);
- Established SME Funding (10 to 250 employees, having an annual turnover of less than €50m or an annual balance sheet of less than €43m);
- Funding to Commercialise Research (for researchers in Higher Education Institutes)
Local Enterprise Offices offer numerous grants:
- Feasibility Study Grants (to assist the promoter to assess market demand);
- Priming Grants (available to businesses employing up to 10 employees within the first 18 months of start-up);
- Business Expansion Grants (for businesses trading over 18 months);
- Trading Online Voucher Scheme (fewer than 10 employees and an annual turnover of less than €2m).
Microfinance Ireland provides small unsecured loans:
- Microfinance (fewer than 10 employees and an annual turnover of less than €2m)
Tax relief
Further supports are offered to early stage enterprises through a variety of tax reliefs and tax planning:
Start-up Refund for Entrepreneurs (SURE) - a refund of income tax paid in previous years;
The Employment Investment Incentive (EII) for companies (tax relief for trading companies to attract equity-based risk finance from individuals);
Section 486C Tax Relief (reduction of a company's corporation tax for the first three years of trading);
Research and Development Tax Credit (25% of qualifying expenditure used to reduce a company corporation tax).
Budget 2018
Budget 2018 was announced on 10 October 2017 and introduces:
- Key Employee Engagement Programme (KEEP) - an incentive to facilitate the use of share-based remuneration by small and medium sized companies to attract key personnel. In place of the existing liability to income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI), gains arising to employees upon the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares.
Footnotes
[*] *Gazelle companies are less than five years old high growth enterprises. High-growth is defined as average annualised growth of 20% per annum over a three-year period.
[2] The Global Entrepreneurship and Development Institute.
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