There is provision for relief from corporation tax on trading income for new companies in the first three years of trading. The relief takes the form of a reduction in the corporation tax liability relating to the new trade (include chargeable gains on assets used in the trade) but is capped at the amount of the employer’s PRSI contributions paid by the company in the relevant accounting period. The corporation tax liability relating to the new trade can reduce to nil where that liability does not exceed €40,000, subject to any restriction imposed by the cap. Marginal relief applies where the corporation tax liability is between €40,000 and €60,000.
The relief previously applied only to trades set up and commenced by a new company in the period from 1st January 2009 to 31st December 2014. The Finance Act 2014 now extends this period to 31st December 2015. The Minister has also indicated that a review of the operation of the measure will take place in 2015.
Brian Dignam is Director in OSK. Contact OSK for all your accounting and tax queries on 01 439 4200.
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