The scope of the BUSINESS EXPANSION SCHEME (BES), which has been in operation since 1984, includes a scheme to provide a refund of tax already paid by an individual who sets up and takes employment in a new qualifying business.
Known as the Seed Capital Scheme, it gives income tax relief to those who invest capital in qualifying Irish companies thus enhancing the ability of companies to attract outside investment.
The tax relief is given for the year in which the investment is made and the tax refundable cannot exceed the total paid in the previous 6 years.
For further information contact us at tax@fixmytax.com
The purpose of the scheme is to give any person who is an employee, an unemployed person or were made redundant recently and are interested in starting their own business an opportunity to avail of the tax refund to which they may be entitled under the Seed Capital Scheme.
An employee who leaves employment and invests by means of shares in a company which carries on a new business, may claim a refund of income tax paid in previous years. An unemployed person may also avail of this facility.
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You could receive all the income tax you have paid over six years, if your investment is big enough.
You can select the tax years for which you may claim refunds from any or all of the six years prior to the year of investment. Your investment must be claimed up to the extent of your total income in each of the selected years. There is no facility available where the investment can be spread over a number of years so as to utilise personal allowances in each year.
For each of the selected years, the refund is limited to the tax you have paid.
The refund may be claimed immediately the company starts to trade.
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Manufacturing generally
Enterprise Ireland, SFADCo, Udaras na Gaeltachta or County Enterprise Boards, as appropriate.
Fish farming (Aquaculture) and fish processing
An Bord Iascaigh Mara.
Internationally traded services and services with the potential to be internationally traded services
Enterprise Ireland, SFADCo, Udaras na Gaeltachta or County Enterprise Boards, as appropriate.
Tourist traffic undertakings
Failte Ireland.
Micro-propagation of plants, plant cloning, mushroom and horticultural cultivation
The Minister for Agriculture and Food.
Activities to be carried on in an exchange facility established in the Custom House Docks Area
IDA - Ireland.
Commercial research and development
Enterprise Ireland, SFADCo, Udaras na Gaeltachta, or County Enterprise Boards, as appropriate.
Musical/Video recordings by a new artist produced in the State
The Minister for Arts, Sport and Tourism.
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You must not within the 12 months before your first investment in the company, have held either directly or indirectly, more than 15% of the share capital or of the loan and share capital of any other company, or 15% of the voting power in any other company.
However, this prohibition is waived where you own more than 15% of only one other company provided that:- - the turnover of the other company in each of that company’s three accounting periods prior to the company’s accounting period in which the investment is made in the seed capital company did not exceed €127,000, and - the other company is a trading company (other than a company trading in land or financial services). This prohibition is also waived where you own more than 15% of a shelf or dormant company.
The company must not have any special trading arrangements with your former employer. Normal business transactions are, however, acceptable, provided these are conducted on the same terms as with any other unrelated company.
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If you require more information please consult your tax advisor or email us at tax@fixmytax.com.
