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Corporation Tax Incentives

The new Tax Credit scheme for Research and Development Expenditure

The current 20% rate of tax credit for incremental expenditure undertaken by a company on qualifying research and development (R&D) is being increased to 25% for all accounting periods beginning on or after 1st January 2009. There is also an additional option to carry back unused tax credits for offset against corporation tax paid in previous years and the unclaimed balance can be carried forward to be claimed over 3 years as a credit.

3 year tax exemption for start up companies

New start-up trading companies which commence trading on or after 1 Jan 2011 will be exempt from Corporation Tax and Capital Gains Tax in each of the first 3 years provided that their tax liability in the year does not exceed €40,000. Certain conditions must be met to avail of the exemption. It is worth noting that the Corporation Tax exemption does not apply to “service companies”.

The 2011 budget was extended to include start-up companies which commence a new trade in 2011. The scheme has been modified so that the value of the relief is linked to the amount of employers PRSI paid by the company.

Capital Allowances for Energy Efficient Equipment

These incentives allows for 100% relief in year of expenditure on energy efficient equipment. Some of the main expenditure this would apply to are as follows:

• Data server related systems & energy saving office equipment associated with IT
• Efficient heating/electricity equipment and control systems
• Efficient heating/electricity equipment and control systems in relation to ventilation and air conditioning
• Alternative fuel vehicles