The Government announced in Budget 2009 their proposal to introduce a three year exemption from taxation for start up companies commencing to trade on or after 1 January 2009. The relief was conditional on obtaining EU approval. The EU has given the go-ahead and at the time of going to print a draft Ministerial Order is with the Minister for signing.

The three year exemption from taxation will apply to profits and gains of a company with a tax liability of less than €40,000 per annum. Marginal relief will apply where the tax liability is between €40,000 and €60,000 per annum. Effectively, at a current corporation tax rate of 12.5%, companies can shelter profits up to €320,000 per year or €960,000 over the three years.

Among the conditions to be satisfied in order to qualify for exemption:

• The company must be incorporated on or after 14 October 2008
• The company must commence to trade during 2009
• The trade must be a new trade
• Professional services companies cannot qualify for exemption

The relief is legislated for in section 486C of TCA 1997, however it will not come into effect until the Ministerial Order is signed by the Minister.

The Minister announced in Budget 2010 that the three year exemption for start up companies in 2009 would be extended to new start ups in 2010.