Three year Corporation Tax Exemption

Extension of Corporation Tax relief

In 2010 the Minister for Finance introduced a stimulus to encourage the establishment of new companies that have commenced to trade, which has now been extended to the 31st December 2021, in the form of a three year remission from taxation from profits and capital gains for newly incorporated companies with a tax liability of less than €40,000 per annum.

The scheme provides relief from corporation tax on the trading income and certain gains for newly incorporated start up companies in the first 3 years of trading. There will be full relief on income and gains relating to the trade where total corporation tax liability in any of the first 3 accounting periods does not exceed €40,000. You can earn €320,000 tax free per year for the first 3 years.

The relief available is now based on the amount of the employers PRSI paid by an employer in respect of their employees.

  • Corporation Tax is currently 12.5% which equates to €320,000 of profits for each of the first 3 years
  • Over 3 years the total available exemption is €960,000 on trading profits
  • This equates to €100,000 in corporation tax exemption over 3 years were the exemption does not exceed €40,000 in any given year.
  • This is in respect of companies incorporated on or after 14th October 2008
  • This is in respect of newly incorporated companies which has not previously been carried on in the State by another person
  • The corporation tax relief is for three years from the commencement of trading activities of the newly incorporated companies
  • The maximum amount per year is €40,000 for each of the first 3 years
  • Relief from corporation tax is linked to the amount of employers PRSI that the company has paid and the maximum that can be claimed is €5,000 per employee

Companies in the road transport sector are restricted to a total of €100,000 over the 3 years.

The following types of companies do not qualify for the tax relief:

  • Companies dealing in land
  • Companies dealing in petroleum
  • Companies dealing in mineral activities