What is Start Up Relief for Entrepreneurs (SURE)?
SURE is a tax refund scheme that applies to entrepreneurs who leave employment to start their own Limited Company. The Limited Company must be less than two years old and it cannot be an existing business. For example, a Sole Trader who later incorporated into a Limited Company cannot avail of SURE.
When you set up a Limited Company, you need shareholders to invest in it and in return, these shareholders receive issued shares. It is common for Directors and shareholders to be the same people in Startups and SMES. In this case, the SURE scheme is very attractive for Directors of new Limited Companies. This can be single Director and single shareholder company or multiple Director and multiple shareholder company. In other words, it doesn’t matter what size the company is, the SURE scheme is open to many entrepreneurs setting up a business in Ireland.
It’s also good to note that you can avail of SURE even if you are leaving part-time employment to set up your own company.
How much refund can you get?
Under the SURE scheme, shareholders may be entitled to an income tax refund of up to 41% on the amount you invest into the company.
As well as that, shareholders may also be eligible to get a refund on PAYE income tax that you paid over the 6 years before you set up your company.
The amount you can claim depends on the size of your investment. So you should speak to an accountant if you need help calculating your potential SURE refund.
Things to consider before availing of SURE scheme
If you are interested in setting a new Limited Company and availing of SURE scheme, these are the general qualifying conditions:
You need to have mainly PAYE income in the previous 4 years
PAYE income refers to income through full-time or part-time employment. Even though you need to have PAYE income in the previous 4 years, you can make a SURE claim based on the PAYE paid in the previous 6 years.
You need to make an investment into the company by purchasing new shares
The minimum investment under the scheme is €250 and the maximum investment is €100,000 per year. You need to purchase new shares in a company which means they cannot be transferred from a different shareholder to you.
You must hold at least 15% of the issued share capital
15% of the issued share capital must be held for 12 months after the issue of shares. If your company has not started to trade, the 12-month holding period starts when the company begins to trade.
You need to be a full-time employee of the company as a Director or an employee within 6 months of the investment being made
You cannot be employed elsewhere during the 12 month period. You also can't receive any payment from the company other than reasonable remuneration and expenses for 3 years after the issued shares have been purchased. In other words, you can take a salary from the company but you cannot work anywhere else.
You must not have 15% share capital in any other company
In the 12 months leading up to the new company incorporation, you cannot have a share capital, loan capital or voting rights of any other company.
You need to keep the shares for 4 years
As well as keeping 15% of the issued shares for 12 months, you must also hold onto the shares for a total of 4 years from the date of issue.
Can any company claim a SURE tax refund?
No, there are certain requirements the company must also meet. We have listed a few additional requirements for the SURE scheme below.
We always recommend you call us if you would like more information as each scenario is different. Get in touch with an accountant before you set up a new Limited Company to determine if you’ll qualify for SURE.
Be a qualifying new venture (the definition of qualifying activities are outlined below)
Most companies are deemed to be carrying out a qualifying trade. Revenue outlines the exceptions to qualifying trades and we have listed them below.
The company needs to be incorporated and trading in the EEA
You need to set up a company in Ireland, or in any of the 28 EEA-member states and Iceland, Norway and Liechtenstein. The company needs to be a tax resident here or in the EEA.
The activities of the business need to be carried out in a fixed place in Ireland
This means that the company should have an office or premises in Ireland in order to avail of this scheme. If you need help understanding if your company qualifies, give our expert team a call or send us an email and we can help you.
What are the qualifying trading activities?
If your business has a turnover, it is likely to be deemed as trading. Qualifying trading activities refer to most business activities and Revenue outlines the exceptions to this.
- Once-off speculative transactions. For example, a company set up to do a sole transaction, such as holding a property or asset.
- Dealing in commodities or futures in shares, securities or other financial assets
- Financing activities e.g. making loans
- Professional service companies e.g. accountants, solicitors, business advisors, doctors and architects, however Internationally Traded Financial Services may qualify
- Dealing in or developing land (including building development)
- Operations carried on in the coal industry or in the steel and shipbuilding sectors
- The production of film
Check your industry with a professional
There are some industries that have additional requirements. For example, if your company is involved with green energy activities, then all the money you invest into the company must be spent prior to the final month of the 4 year holding period for shares.
For example, Alan invested €100,000 into a green energy company in November 2019. All this money needs to be spent by the company in or before October 2023.
If you need help to determine if your company qualifies for the SURE scheme, our accountants can give you advice and guidance on how to apply. Get in touch with us to receive a quote for our services today.
How much refund can I get under the SURE scheme?
The refund amount depends on the gross pay you have received and the tax you have paid over the previous four years. Individual circumstances, such as the amount of tax credits you are eligible to claim, can also affect the amount of SURE refund you are entitled to.
For example, Brian invested €100,000 in 2019 and he is entitled to claim SURE based on tax paid in 2018 and 2017. Brian had an annual PAYE salary of €60,000 for a single person. Therefore he claims €60,000 of his investment in 2018 and the remaining €40,000 in 2017. His estimated refund would be €13,790 for 2018 and €13,240 for 2017.
An accountant can help you calculate the refund amount you may be eligible to claim. If you would like a specific calculation, contact us for a quotation for our accountancy consultancy services.
Alternatively, you can use an online SURE refund calculator to get an estimate of the relief you may be entitled to.
Can I make a claim for Research & Development (R&D)?
You may still avail of SURE relief if you have not started to trade but there are certain conditions you must meet.
We go through two ways your company's R&D activity could qualify for the SURE scheme below:
Trading must start within 2 years
The company must start trading within two years of the investment being made and all the money invested in the company by issuing shares must be spent on R&D before the end of year 3 of the holding period.
For example, Christina invested €100,000 into a new Startup in November 2019 and the company started invoicing clients in January 2021. This means that for the purpose of SURE, they started trading in January 2021. Christina's investment was spent on R&D activities during the first 3 years of being a Limited Company and the company spent all the investment by the 31st October 2022. Lisa’s company qualifies for SURE.
All investment must be spent on R&D
The company must spend all the money dedicated to R&D and must dispose of a specified intangible asset (e.g. intellectual property or know-how) before the date that is one month before the end of the 4-year holding period.
Another example is that Sarah invested €100,000 into a new Startup in November 2019. The company focused on R&D and the company has developed a new process which they want to patent. The money Sarah invested was spent on R&D over a 4 year period and Sarah’s company qualifies for SURE.
How do I prove my company is carrying out R&D?
If your company hasn’t started to trade, then the company must be carrying out a qualified R&D activity in order to claim the SURE scheme.
Revenue require documentation that outlines the lifetime of your research project from beginning to end. Any relevant accounts and records to support your claim should be kept organised in case of a Revenue audit. Failure to show evidence of qualified research and developement activities may prohibit the process time of your claim.
Companies that want to qualifying their activities as R&D activities must meet the following conditions:
- Be in a field of science or technology
- Carry out basic research, applied research, or experimental activities
- Seek to achieve scientific or technological advancement
- Resolve scientific or technological uncertainty
For more infortation on the conditions for R&D, take a look at our guide about the topic of R&D tax credit. If you don’t qualify for the SURE scheme, your company may be eligible to claim a 25% tax relief on qualifying R&D activities.
Speaking to an accountant will help you determine what tax credits or reliefs you are entitiled to. Get in touch with our Client Services Team who can help you decide the best services you need for your company.
How do I avail of the SURE scheme?
In general, you can make a claim once the company has made their first sale. You need to complete a form SURE C to claim a tax refund under the SURE scheme.
Your accountant can help you fill in this form and answer any questions you have on it. The form SURE C is completed after the company has been incorporated so feel free to get in touch with us for more support on the set up process.
What do I need to do next?
1. Set up new Irish Limited Company
Firstly, you need to set up a new Limited Company in Ireland. We offer this service for only €249+VAT and we take care of everything from preparation of paperwork including form A1 and constitution to share certificates. You will receive your company number within one week. As mentioned, you need to set up a new Limited Company with a qualifying trade in order to avail of SURE.
2. Set up a bank account
Once your company has been set up, it’s time to open a business bank account in Ireland. You need to pay for the new shares which have been issued to you. You can do this by depositing the money into your business bank account. Revenue may look for proof that you have paid for the new shares and you can show them bank statetements to prove this.
Talk to us
If you’re unsure about what you need to do in order to avail of SURE, get in touch with one of our Client Services Team. We are happy to help you select the services that are right for you. We offer a wide range of services to ensure you set up your company correctly.
Get in touch on our phone number +353 1 905 9364 or email firstname.lastname@example.org.