Irish businesses are crystal clear about the number one challenge they face right now. Rising costs across the board – the price of goods and services, energy, finance, labour – have conspired over the past couple of years to put the squeeze on margins and threaten the viability of thousands of small businesses.
According to business lobbying group Ibec, 74% of leaders identified the cost of doing business as their biggest challenge in 2024. 70% say they have concerns about their ability to keep trading. The number of businesses worried about the hike in labour costs has doubled from 43% in 2023 to 85% this year.
Such concerns add up to a challenging environment for start-ups. Upfront costs for launching a new venture can be high and often rely on borrowing, which has itself become more expensive with interest rate rises. High initial launch and ongoing operating costs can force new businesses to operate in the red for extended periods of time, creating pressure for rapid revenue growth that may not be feasible.
There are, however, various support options available to help entrepreneurs manage costs in the critical early stages and establish a strong foundation for growth. Many of these benefits are available through the tax system. Here are five that can help you cut costs from your new venture.
Start-up Tax Relief
New companies may qualify for Section 486C tax relief, reducing their Corporation Tax liabilities for the first five years of operation. The relief is available if tax owed is €40,000 or less in a tax year, with partial relief available between €40,000 and €60,000. The reduction is calculated according to how much Pay Related Social Insurance (PRSI) you pay, up to a limit of €5,000 per employee or €40,000 in total.
Startup Relief for Entrepreneurs (SURE)
Individuals who start their own business after leaving employment can also benefit from the SURE scheme. This provides a refund on previous income tax paid to help navigate initial start-up costs.
Entrepreneur Relief on Capital Gains Tax
The Revised Entrepreneur Relief sets a Capital Gains Tax (CGT) rate of 10% on the disposal of qualifying assets. This compares to the standard CGT rate of 33%. An individual must have owned the assets in question for a continuous period of three years to quality. There is a lifetime limit of €1 million on the gains that you can claim relief on.
Tax Incentives on Investments
Ireland’s tax system has a number of measures in place to incentivise investments in start-up businesses through tax relief. One is the Employment Investment Incentive Scheme (EIIS), which provides income tax relief on earnings from equity investments up to €250,000, or €500,000 if shares are held for a minimum of seven years.
A similar scheme aimed at investments in micro businesses is the Start-Up Capital Incentive (SCI), which is specifically targeted at family members of existing shareholders in small start-ups.
Alternatives to Financing
As well as incentivised investments, entrepreneurs can also access alternatives to financing in the form of various grants and other packages. Enterprise Ireland offers several to start-ups, including a Pre-Seed Start Fund that offers sums of between €50,000 and €100,000 in the form of convertible loan note instruments. Local Enterprises Offices also provide grants worth up to €150,000 to new businesses at different stages of their development.
Speak to an Expert
To find out more about financial support for start-ups and entrepreneurs, contact our team.
