Tax Reliefs for Business

Employment Wage Subsidy Scheme (‘EWSS’)

The qualifying period for the operation of EWSS is formally extended until 30 April 2022. The conditions with regard to the eligibility and operation of the scheme will remain unchanged i.e. the main criteria at present being the satisfaction of a 30% reduction in turnover/customers order to the end of 2021 when compared to the relevant comparable period. For further details, click here. 

The key changes are in respect of the rates of the subsidy to be paid. The current rates of between €203 and €350 will continue to be payable for the month of November 2021. Thereafter, the rates will change as follows:

It is noted that the scheme will be closed to new entrants with effect from 1 January 2022. Any employers who are eligible employers for the purposes of the scheme as at 31 December 2021 will be permitted to remain in the scheme through to 30 April 2022, and notably there will be no requirement for such employers to undergo any further reviews of their eligibility during this final four month period of the scheme.

It is also worth noting that the Minister did indicate that the reduced rate of Employer’s PRSI for employments within EWSS of 0.5% will cease on 28 February 2022. The details of this change will be outlined as part of Social Welfare legislation in due course.

It is noted that the scheme will be closed to new entrants with effect from 1 January 2022. Any employers who are eligible employers for the purposes of the scheme as at 31 December 2021 will be permitted to remain in the scheme through to 30 April 2022, and notably there will be no requirement for such employers to undergo any further reviews of their eligibility during this final four month period of the scheme.

It is also worth noting that the Minister did indicate that the reduced rate of Employer’s PRSI for employments within EWSS of 0.5% will cease on 28 February 2022. The details of this change will be outlined as part of Social Welfare legislation in due course.

Employment and Investment Incentive (‘EII’)

As announced in the Budget, the Bill confirms that the Employment Investment Incentive (‘EII’) Scheme will be extended for a further three years to 31 December 2024.

While positive refinements have been made to the EII rules in recent Finance Bills, the Minister for Finance acknowledged in his Budget speech that the relief has not yet reached its potential, particularly in relation to early stage companies and high potential start-ups. The Finance Bill introduces a number of amendments to enhance the relief as follows:

• Expanding the range of investors who are eligible to participate in the scheme by permitting institutional investors to access the EII Scheme through a wider range of investment funds going forward and not just through designated investment funds (DIFs) with a view to attracting new sources of finance for SMEs.
• Removing the requirement that a qualifying company must have spent 30% of the funds raised before it can issue a Statement of Qualification (SOQ) to Investors. This means that a SOQ can be issued once an investment is made in a qualifying company.
• Relaxing the rules around the “capital redemption window”. A qualifying company can redeem shares, or purchase shares from a member other than an EII investor who is within their compliance period, without triggering a clawback of EII relief. This is known as the “capital redemption window” under the EII Scheme. The Bill relaxes these rules so that investors with a number of investments in a company over multiple years may redeem an investment for a year where that year is outside the compliance period even though other investments may still be within their compliance periods.

Corporation tax relief for certain start-up companies

Certain start-up companies carrying on a new business may qualify for relief from corporation tax on business profits in their first three years of trading. This relief was due to expire on 31 December 2021 but is extended by Finance Bill 2021 to 31 December 2026. In addition, companies who commenced to trade on or after 1 January 2018 can now avail of the relief for the first 5 years of trading.

In summary, the relief operates to reduce the corporation tax payable on the profits of the new trade to NIL where those profits are less than €320,000 per annum, with partial relief applying where the profits are between €320,000 and €480,000 per annum. To claim the maximum relief, the company must have at least 8 employees as the level of relief is linked to Employer’s PRSI, capped at €5,000 per employee (i.e. the maximum corporation tax liability relieved to NIL is €40,000 per annum).

Where the amount of the corporation tax liability is less than €40,000 in any year, any unused relief from the five year period may be aggregated and carried forward against future trading profits of the company.

Digital Gaming Tax Credit (‘DGTC’) 

The Bill legislates for the new tax credit for the digital gaming sector, providing relief for qualifying costs incurred in the development of digital games. This measure is subject to a Commencement Order. A refundable corporation tax credit is available to digital games development companies for qualifying expenditure incurred on the design, production and testing stages of the development of qualifying digital games, subject to conditions.

The credit will be at a rate of 32% of the lower of

• the eligible expenditure, 
• 80% of the qualifying expenditure and 
• €25 million per project.

The minimum spend per project is €100,000 in order to qualify for the relief. 

A digital game must be issued with a Cultural Certificate from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media to qualify for the credit.

Relief will not be available for digital games primarily produced for the purposes of advertising or gambling.

Expenditure which has already received relief through Film Relief, the R&D tax credit, certain other reliefs or which is grant aided is not eligible for the DGTC. 

The DGTC is available up to 31 December 2025.