Monday 25 September 2017

New Budget tax reliefs to help start-ups compete with London

'Finance Minister Michael Noonan is looking at ways encourage so-called ‘angel’ investors who put money into start-ups in the high-risk early stages'
'Finance Minister Michael Noonan is looking at ways encourage so-called ‘angel’ investors who put money into start-ups in the high-risk early stages'
Kevin Doyle

Kevin Doyle

A series of tax measures aimed at encouraging people to invest in start-up companies will be introduced in the Budget.

Existing incentives for people who invest in start-ups and for entrepreneurs are seen as restrictive and face a major overhaul, amid fears that Dublin is losing out to London and other EU capitals.

Finance Minister Michael Noonan is looking at ways encourage so-called ‘angel’ investors who put money into start-ups in the high-risk early stages.

It comes as the controversy rages over why Dublin lost the Web Summit which was a massive start-up event.

“We really need to improve the offering for start-up businesses here,” said a Government source.

“Dublin has a good reputation in the area but increasingly people are starting to look abroad and realise that it is easier to be a start-up in other cities.”

Mr Noonan has received more than a dozen submissions from parties in the topic over recent months and is currently teasing out a plan.

One idea is to introduce new tax reliefs for private funding similar to the UK’s Seed Enterprise Investment Scheme (SEIS).

It provides an income tax relief of 50pc on investments of up to £100,000 in a tax year.

Some of the existing tax reliefs are also to be altered, including the Start Up Relief for Entrepreneurs (SURE) scheme, which enables PAYE workers to claim income tax relief on investments.

This cannot amount to more than the person has paid income tax over the previous six years.

The restrictive nature of SURE means it has been taken up by only around 60 companies a year which is considered “minuscule”.

However, the minister is set to open it up to a wider group of potential entrepreneurs.

“Self-employed people are often the biggest entrepreneurs so it makes that they could avail of a tax relief like this,” said a source.

Another area being explored by officials at the Department of Finance is a relief known as the Employment and Investment Incentive.

It allows investors, who control less than 15pc of a company, to apply for 30pc tax relief in the first year and a further 10pc after three years.

It was introduced in 2011 but actually resulted in a reduction in the level of tax relief being granted to investors, compared with its predecessor the Business Expansion Scheme.

In a recent submission to the Department of Finance, the Irish Tax Institute warned that Ireland is in a very competitive market for start-up investment.

“Investment capital is very mobile and other jurisdictions have increasingly competitive offerings. The current Entrepreneur Relief is very restrictive and complex,” it said.

Irish Independent

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