How does the seed capital scheme work

The seed capital scheme allows a refund of tax already paid for an investor who sets up and takes up employment in a new qualifying business.

For example:

Nicola earned €400,000 over 2011 / 2012 in PAYE income and paid €144,000 income tax

She sets up a business in 2013 which qualifies for the seed capital scheme and invests €200,000

Provided she qualifies with the conditions (I have a very broad outline below, further details available on the revenue website) Nicola will now receive a refund from the Revenue of €82,000 (41% income tax on the €200,000 investment.)

Nicola must enter into a full-time employment contract for at least one year with the company as an employee or a director starting either within the tax year in which the investment is made.

Nicola must subscribe to the shares of the company

She must acquire at least 15% of the issued share capital of the company and must maintain the level of shareholding at that percentage for at least one year, even if the share capital of the company should expand.

Nicola’s company must be set up with the intention to carry on qualifying trading operations. Qualifying trading operations are listed on the revenue website.

This is a very broad outline of a complicated tax area, First step is to read the full guide on the revenue website and then consider speaking to your accountant or tax advisor. If you would like to discuss the seed capital scheme further please do not hesitate to contact us on 01-4800531

Professional Service Company Surcharge

Section 441 TCA 1997 provides for a surcharge on undistributed income of certain service companies.

The section defines a service company as including close companies where the principal part of the company’s income is derived from:

The carrying on directly of a profession
The provision of professional services
Or a company

Which has or exercises an office or employment.
Also included are:

The provision of services or facilities to such companies, or
The provision of services or facilities to an individual or partnership carrying on a profession. However, not included in the latter are genuine cases where the services or facilities are provided for persons not connected with the company.
As the tax acts do not define “profession” it must be given its ordinary meaning in accordance with the general principles of statutory construction. In the tax case of CIR V Maxse, 12 TC 41, it is stated that profession involves an occupation requiring either intellectual skill, as in painting, sculpture or surgery or skill controlled by the intellectual ability of the operator. It distinguishes this from an operation, which is substantially the production or sale of commodities.

While some activities obviously fall within this definition and are easily accepted as being the exercise of a profession, such as medicine or law, there may be questions about the status of others. Each case should be examined with regard to its own particular facts and the question of degree is important.

However the following are regarded as being professions and as falling within the provisions of Section 441:

Auctioneer/Estate Agent
Computer programmer
Management Consultant
Private School
Quantity Surveyor
Veterinary surgeon.

While the above are considered to be providing professional services, the list is not intended to be an exhaustive list of all possible professions.

The following activities are generally not considered to constitute the carrying on, of a profession:

Advertising Agents1
Auctioneers of livestock in a cattle mart
Insurance brokers2
The operation of a retail pharmacy
Public relations companies

It is also considered that whereas accountancy comes within the meaning of profession, bookkeeping, payroll and VAT compliance activities would not in themselves constitute a professional activity. Any business involving tax planning, be it investing or structuring, would come within the general heading of accountancy. It is considered that this encompasses financial services.

Insurance Brokers
It should be noted that while it is accepted that the Case 1 income of insurance broking companies is not within the scope of Section 441, deposit interest on deposits held by such companies are not regarded as arising in the course of the company’s trade unless the company can satisfy the very high burden of proof that the deposits are integral to its trade. (See Revenue Information Notice “Deposit interest – Whether a trading receipt”). As such, therefore deposit interest is assessable Case III and is within the scope of the Section 440 surcharge on undistributed investment income.

How to save time when invoicing with Xero online accounts

One of the great things about using an online accounting package like Xero is the time you can save.  There’s still certain points in everyones business where manual data entry is required. One of these points is raising sales invoices.

  1. Use the copy function– A lot of small businesses issue the same or similar invoice every month. By using the copy function data entry time can be saved.  
  2. Use inventory items– If you consistently sell the same items, for example a days consultancy, You can set this as an inventory item which saves choosing the account code price and tax rate every time your rasing an invoice
  3. Recurring invoices– This are my personal choice, If you are invoicing the same client over a fixed period you can set Xero to automatically raise the invoice and either save it as a draft or post it to the sales ledger and email directly to the client. If you combine recurring invoices with auto bank feeds you will ‘almost’ have automated accounting with minimal human input
  4. Integrations– There’s now a large number of online packages which integrate into xero, Some of these like workflowmax can record time , raise invoices, and integrate these invoices directly into Xero saving data entry between packages. If  you use a software package not currently integrated into Xero you could have a bespoke integration made into Xero’s api

Is there VAT on the plastic bag levy?

No. When calculating a VAT liability, retailers who account for VAT under a retailer’s scheme should simply exclude the levy from the sales / turnover figure. Retailers who do not use a retailer’s scheme should ensure that the levy is not included in the taxable amount for VAT.

Where do I get a VAT certificate?

Sometimes when dealing with suppliers in the EU you will be asked to provide a VAT certificate. This is simply a certificate of taxable status which can be ordered from the revenue on the following link


In the short term the vendor can verify your VAT registration details on the following link