In an attempt to encourage the establishment of new companies a three year remission from taxation from profits and capital gains for companies with a tax liability of less than €40,000 per annum was announced in Budget 2009.

Companies that qualify will be fully exempt from corporation tax on trading profits and chargeable gains on the disposal of assets used for the new trade where the total amount of corporation tax does not exceed €40,000.  Where corporation tax for the period is between €40,000 and €60,000, marginal relief will apply.

This relief will apply for three years from the commencement of the new trade. Therefore the company could shelter from tax up to €960,000 of trading profits over a three year period.  The following conditions apply:

–  The company must be incorporated on or after 14th October 2008

–  The company must commence to trade during 2009 or 2010

–  The trade must be a new trade and must not have been carried on previously by another person in the state

– The tax relief will apply for 3 years from the commencement of the new trade.

– The tax relief does not apply to companies that are dealing in land or petroleum and mineral activities.

– The tax relief does not apply to professional service companies.

– The tax relief for companies operating in the road transport sector is restricted to a total of €100,000 over the 3 year period.

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