Over 1,500 Irish Company start-ups were formed last month – the highest for new companies in July since 2007.

Company start-ups rose 11% (1,518) in July 2014 when compared to the same month last year (1,371) – this is an average of 49 new companies being formed daily last month.

Corporation Tax Exemption

New or start – up companies which commence trading before 31 December 2014 are exempt from corporation tax if they meet certain conditions and provided that their tax liability does not exceed €40,000. The relief applies for three years from the commencement of the trade.

Relief does not apply to companies which carry on land dealing, petroleum and mineral activities nor closely held service companies. Relief is restricted to new trades and it does not apply if the trade is previously carried on by another person in the State.

The relief is restricted based on the level of Employers PRSI paid. In a move aimed at encouraging employment, the relief will be linked to Employers PRSI subject to a maximum of €5,000 per employee and a maximum corporation tax liability of €40,000. The relief will be the lower of the qualifying Employers PRSI or the reduction in the corporation tax liability otherwise applicable.  You will note from these changes that the relief is dependent on the number of employees that the Company has.

Please note a shareholder and the person in control of the Company will not be liable to Employers PRSI so their salary will not be taken into account.

Prior to the Finance Act 2013, the relief was granted on a “use it or lose it” principle. However this Act provided for a significant enhancement of the tax relief for start-up companies by allowing any relief not availed of in the first 3 years of trading, due to losses or insufficient profits to be carried forward for use in subsequent years.

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Among the many services we provide, we can incorporate a new company for you in just 4 working days.

We pride ourselves in providing a top class quality service to all our clients and we take a real interest in business start-ups. 40% of new businesses will fail in their first year so it is vital to get good support and advice to avoid becoming a first year statistic.