SWEDISH CHAMBER OF COMMERCETAX INCENTIVES FOR BUSINESSGERRY VAHEY11 April 2013

TABLE OF CONTENTS

1. Corporation Tax Rates, Losses, deductions etc

2. Start up Exemption

3. Holding Company – Participation Exemption

4. Research & Development Tax Credit

5. EIIS & Seed Capital Relief

6. Assignment Relief (“SARP”)

7. Foreign Earnings Deduction (“FED”)

8. Other Issues

2

CORPORATION TAX - GENERAL

• 12.5%, 25%

• Tax deduction for most items of expenditure

• Incorporation versus Sole Trade

• Intangible Assets

3

• Overview

• Relief from Corporation Tax

• First 3 years Profits

• Incorporation and Commencement

• Employment Based Relief

START UP EXEMPTION

• The Relief

• Relief of up to €40,000

• Marginal Relief to €60,000

• Trading Profits

• Carry forward of losses

START UP EXEMPTION

HOLDING COMPANY – PARTICIPATION EXEMPTION

6

HoldCo

Trade Co

RESEARCH & DEVELOPMENT TAX CREDIT

• 25% Tax Credit

• Offset against Corporation Tax

• Refunded over 3 years

• Reward key employees

COMPANY TAX CREDIT €60,000

RDTCYear 1Refund

Year 2Refund

Year 3Refund

Year 4Refund

Year 1 20,000 20,000 20,000 -

Year 2 - 20,000 20,000 20,000

Year 3 - - 20,000 20,000

Year 4 - - - 20,000

  20,000 40,000 60,000 60,000

DIRECT R&D EXPENDITURE

Direct Staff Costs

Raw Materials

Direct Over-heads

Computer Software &

Hardware costs

Sub Contracted R&D Costs

(Rules)

Plant & Machinery

Buildings (Special

Improved Rules Apply)

Fixtures & Fittings

Other ?

SOME….QUALIFYING ACTIVITIES

prototyping design trials testing moulding workings drawings failed attempts

recipes blending reaction extensive testing process

& output performance Stability control

first batch scale up production clinical trials process & output improvements

Algorithm & OS development statistical data management generic software improvements

Qualifying Activities

SOME …. QUALIFYING ACTIVITIES (BROWN COAT?)

Process Improvements : Definable Increases in Output, Volume, Running Time etc

Automation

MONEY BACK FROM REVENUE

• Reliefs

• Employment and Investment Incentive Scheme (EIIS)

• Seed Capital Relief

• Start-up Relief

• How these interact with

• R&D Tax Credit

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

• Benefits

• Cash for Company

• Income Tax Relief for Investor

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

• The Company

• Trading company

• Unquoted

• Residence & Incorporation

• Micro, Small and some Medium Sized Enterprises

• Max Lifetime limit of €10m

• Max Annual limit of €2.5m

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

• The Investor

• Resident in Ireland

• Hold shares for 3 years

• Not connected to company

• Relief of €150,000 in any one year

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

• Tax Relief

• Initially - 30%

• After 3 years - 11%

EMPLOYMENT AND INVESTMENT INCENTIVE SCHEME (EIIS)

• Practical Issues

• EIIS Investors

• EIIS Funds

• Exit Strategies?

SEED CAPITAL RELIEF

SEED CAPITAL RELIEF

• Key

• Employment in last 6 years?

• Paid PAYE on Employment Income?

• Entitled to Income Tax Refund?!!

SEED CAPITAL RELIEF

• The Relief

• Refund of Income Tax

• Max of €100k per annum

• Previous 6 years

SEED CAPITAL RELIEF

• Conditions

• Investment in Shares

• Qualifying Company

• Creation of Employment

• Qualifying Employment

ASSIGNMENT RELIEF “SARP”

• Inbound employees

• Exempt 30% of income - €75K to €30K

• Relevant Employee

23

FOREIGN EARNINGS DEDUCTION

• Outbound workers

• BRICS + Others

• Max relief is €35K

• Dependent on number of days

24

OTHER ISSUES

• Double taxation network

• Ease of administration

• Expansion abroad

• Remittance Basis

• Revenue Audits

25

mazars.ie

CONTACTMazars

Harcourt Centre Block 3, Harcourt RoadDublin 2, IrelandTel: +353 (01) 4494400Email: mazars@mazars.ie

Mazars Place, SalthillGalway, IrelandTel: +353 (091) 583242Email: mt@mazars.ie