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. It applies to the employed, unemployed, and those made redundant.
The scheme is a refund of income tax that you paid in the previous years and relates to the amount you invest in the new company in Ireland.
Individuals need to make qualifying investments in qualifying companies to claim SURE relief and it’s often used by companies as an incentive to attract equity-based finance from individuals.
In this guide, we’ll explain some of the qualifying features of the SURE scheme and answer some of your most common questions.
If you need specific advice, we recommend you speak to an accountant about your situation. Feel free to talk to our Client Services Team to learn more about our Company Formation and Accountancy Packages today.
What is a qualifying company?
A qualifying company is a company that meets certain conditions. According to these conditions, the company should:
- Be a micro, small or medium enterprise
- Carry out trade in Ireland
- Not be under the control of any other companies
- Only have subsidiaries that meet certain conditions
What is a qualifying investment?
An investment in a company will be a qualifying investment where it complies with certain conditions. The main conditions which must be met are that the:
- Investment is a subscription for eligible shares
- The company uses the amount subscribed for the purposes of carrying on its trade, or for the purposes of carrying out Research and Development and Innovation (R&D+I)
- Investment is based on a business plan.
Who can avail of SURE?
- Companies must be less than two years old and it cannot be an existing business to avail of this relief. For example, if you are changing from Sole Trader to Limited Company, you cannot avail of SURE.
- Individuals who invested cash in a new company in exchange for shares on or after 1 January 2019. There are different conditions for shares issued on or before 31 December 2018 so if you fall into this category, please seek professional advice from your accountant.
- Directors of new companies often avail of the SURE scheme. This is because it is common for directors and shareholders to be the same people in Startups and SMEs. However, it doesn’t matter what size the company is, the SURE scheme is open to many entrepreneurs setting up a company in Ireland.
- You can avail of this scheme if you’re leaving full-time or part-time employment or made redundant.
General conditions of the SURE Scheme
If you are interested in setting a new Limited Company and availing of SURE scheme, these are the general qualifying conditions:
You 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.
Invest cash in the new 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.
Hold at least 15% of the issued share capital in the new company
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.
As well as that, you cannot have more than 15% of the ordinary share capital, loan capital, or voting rights of any other company. There are some exceptions that apply so speak to your accountant for professional advice here.
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.
How much of a refund can you get?
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.
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 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
Most companies in Ireland 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.
Qualifying trades in Ireland
If your business has a turnover, it is likely to be deemed as trading. ``Qualifying trade`` refers to almost all business activities. Revenue outlines exceptions to qualifying trade so if you fall into one of these categories below, we suggest talking to an accountant. Get in touch with us to receive a quote for our services today.
- Once-off speculative transactions. For example, a company set up to do a sole transaction, such as holding property or assets.
- 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
What are the steps to avail of the scheme?
1. Set up a new Irish Limited Company
Firstly, you need to set up a new Limited Company in Ireland. You can do this yourself or outsource to a professional, like Accountant Online. We take care of everything from the 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 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 statements to prove this. Check out our post on the best business account in Ireland for more information.
How do I avail of the SURE scheme?
Once you make an investment in a company, they will provide you with a ‘statement of qualification’. This confirms that the company complies with all the necessary company conditions.
Once you have received the ‘statement of qualification’ you can claim relief. You are responsible for meeting all the necessary investor conditions before you claim relief.
You can submit a claim by completing the relevant parts of the Form 11 or through MyEnquiries.
Your accountant can help you fill in this form and answer any questions you have on it. Please get in touch with us for more support on the setup process.
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.
Tom is a Fellow Chartered Certified Accountant (FCCA) and Chartered Tax Advisor (CTA) and is Accounting Team Manager at Accountant Online. Areas of expertise include Accounting, Compliance, Taxation relating to small business and company directors.