Finance Act 2011 extended the 3-year tax relief for start-up companies to those companies which commence to trade in 2011. The relief as provided for by section 486C TCA 1997 was also modified by Finance Act 2011 so that the value of the relief is now linked to the amount of employer's PRSI paid. Revenue has published Tax Briefing Issue 01 which clarifies the effect of the changes introduced by Finance Act 2011.

In brief, the changes introduced in Finance Act 2011 mean that:

• Where total corporation tax payable by a qualifying start-up company for an accounting period does not exceed €40,000, the aggregate amount of corporation tax referable to income and gains will be reduced to nil or, if greater, to that aggregate as reduced by the amount of qualifying Employers’ PRSI.
• Where total corporation tax payable is between €40,000 and €60,000, the aggregate amount of corporation tax referable to income and gains will be reduced to an amount as calculated in accordance with the marginal relief formula as provided in section 486C (4), or if greater, to that aggregate as reduced by the amount of qualifying Employers’ PRSI

These changes apply to all qualifying companies for accounting periods beginning on or after 1 January 2011. Companies which set up and commenced a qualifying trade in 2009 or 2010 will be able to obtain relief on the basis pre Finance Act 2011 for profits earned in accounting periods commencing before 2011.

The full text of Revenue Tax Briefing Issue 01 is produced on here.