Finance (No.2) Act 2008 – Tax Exemption for New Start Up
Sec 32 of the Finance (No.2) Act 2008 provides for a new relief from corporation
tax for companies, which commence trading in 2009. The exemption is granted in
respect of the profits of a new trade and chargeable gains on the disposal of any
assets used for the purposes of a new trade.
• A “new company” is a company incorporated in the State or in an EEA State
on or after 14 October 2008 and commences a new trade in 2009.
• The exemption is applicable to all companies that satisfy the conditions of a
• A “qualifying trade” means a trade which is set up and commenced by a new
company in 2009 other than a trade-
(i) which was previously carried on by another person and to which
the company has succeeded;
(ii) the activities of which were previously carried on as part of another
person’s trade or profession;
(iii) which is an excepted trade; or
(iv) the activities of which if carried on by a close company with no
other source of income, would result in that company being a
service company for the purposes of section 441.
Where a trade consists partly of excepted operations and partly of other
operations or activities, then section 21A(2) shall apply for the purposes of
this section as it applies for the purposes of section 21A.
• An ‘excepted trade’ means a trade consisting only of trading operations or
activities, which are excepted operations, or, in the case of a trade consisting
partly of excepted operations and partly of other operations or activities, the
part of the trade consisting only of excepted operations which is treated as a
separate trade by virtue of subsection (2).
• In this section, "service company" means, subject to subsection (2)—
( a ) a close company whose business consists of or includes the carrying
on of a profession or the provision of professional services,
( b ) a close company having or exercising an office or employment, or
( c ) a close company whose business consists of or includes the provision
of services or facilities of whatever nature.
• The tax authorities regard the following as being professions, and therefore
not qualifying for the new exemption: Accountant, actor, actuary,
archaeologist, architect, auctioneer/estate agent, barrister, computer
programmer, dentist, doctor, engineer, journalist, management consultant,
optician, private school, quantity surveyor, solicitor, veterinary surgeon. This
list is not exhaustive.
Another example of the subjectivity of this relief is that accountancy comes
within the meaning of profession, while book-keeping, payroll and VAT
compliance activities, would not in themselves constitute a professional
The following activities are considered by Revenue as not constituting the
carrying on of a profession:
• Advertising agents, auctioneers of livestock in a cattle mart, insurance
brokers, the operation of a retail pharmacy, public relations companies
and stock brokers.
• The exemption is granted by reducing the total corporation tax (including the
tax referable to Capital Gains) relating to the trade to nil. Full relief is granted
where the total amount of corporation tax payable by a company for an
accounting period does not exceed €40,000. Marginal relief is granted where
the total amount of corporation tax payable by a new company for an
accounting period amounts to between €40,000 and €60,000. No relief
applies where corporation tax payable is €60,000 or more. Relief shall apply
to companies whose activities consist of wholly or mainly of the conveyance
by road of persons or goods or the haulage by road of other vehicles, shall
not exceed €100,000.
• Where a person transfers a trade to another company, that part of the trade
carried on by the new company, shall be treated as a separate trade.
• Where in an accounting period a company transfers to a connected person
part of a qualifying trade, then the company shall not be entitled to relief
under this section in respect of that trade for that or any subsequent
Before a company is set up and commences trading with the intention to avail of
the tax exemption, tax advice should be obtained to ensure that the trade, being
commenced, satisfies the requirements in the Finance Bill.
If you have any queries or want OmniPro to form your company, please contact
Conor Sweeney or Amy Brennan 059 9183888 or firstname.lastname@example.org