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.
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