The Seed Capital Scheme is a very valuable tax relief for some new enterprises. It should be extended to more start-ups.
The Scheme allows an individual, who invests in a new enterprise, to receive tax relief for the share capital they invest in the business. The tax relief is in the form of a refund of income tax paid in previous years.
The Enterprise Ireland website contains a useful summary of the Seed Capital Scheme, while Revenue.ie has a more detailed (and equally useful) guide to the Scheme.
Unfortunately, the Seed Capital Scheme is restricted to a narrow range of business activities. In general, these are
- tourism undertakings,
- internationally traded services,
- horticulture/mushrooms/plant cultivation,
- commercial research and development,
- musical/video industry; and
- recycling activities.
The full list of eligible categories, and detailed conditions, are listed on the above Revenue link.
In my experience, the Scheme’s restrictions mean that most service-sector start-ups don’t qualify for it. This needs to change.
The extension of the Scheme to all genuine start-ups would provide a fresh incentive for new enterpreneurs and a strong stimulant for job creation.