The Start-Up Relief for Entrepreneurs (SURE) scheme is a tax incentive designed to support entrepreneurship in Ireland.
It allows entrepreneurs to claim refunds on Income Tax paid in previous years to invest in their own businesses.
By offering substantial financial benefits, SURE promotes innovation and encourages the establishment of new businesses, making it a vital tool for budding entrepreneurs.
In this guide, we’ll explain how SURE works, who is eligible, and how you can maximize its benefits.
How SURE Works
At its core, SURE helps entrepreneurs by allowing them to reclaim Income Tax paid in the current and six previous years to fund a new business venture. Eligible investments in a qualifying company are refunded as a tax rebate, easing the financial burden of starting a business.
For example:
- If you invest €50,000 in your new company and have paid €50,000 in Income Tax over the eligible years, you can reclaim the full amount of your tax as a refund.
- If your tax paid is less than the investment, you can claim the relief over multiple years until the €50,000 is fully refunded.
The program caps annual refunds at €100,000 per year and lifetime relief at €400,000. SURE is a practical and strategic way to turn prior tax contributions into capital for a promising business.
Eligibility Criteria
SURE is open to a variety of individuals, ensuring broad access to this valuable relief.
Who Can Qualify?
You are eligible if you meet the following conditions:
- Personal Status:
- You are employed, unemployed, on redundancy, or recently left employment to start your business.
- Investment Requirement:
- You invest personal funds into the company to purchase newly issued shares. There is no borrowing from your own company to fund the investment.
- Employee/Director Role:
- You must work full-time as an employee or director in the new business for at least 12 months.
- Prior Taxes Paid:
- A minimum amount of prior Income Tax (under PAYE) paid in the last 6 years.
Excluded Individuals and Businesses
- The business cannot include professional services (e.g., accountancy, medical practice) or engage in land dealing, forestry, or speculative trading (e.g., commodity trading).
- You cannot claim SURE if you already hold more than 15% of shares in another business unless those shares are disposed of.
Benefits of SURE
Financial Relief:
SURE provides an opportunity to reclaim up to 41% of your investment (if that percentage of PAYE tax was paid). This means starting a business becomes financially more feasible.
Encouragement for Redundant Workers:
It helps unemployed or redundant individuals use savings or redundancy payments to fund a business, turning economic uncertainty into an avenue for innovation and job creation.
Flexible Claiming:
The scheme allows you to spread investment claims over several years to maximize the use of prior taxes paid. Starting with high-pay/high-tax years ensures you get the largest returns first.
The PAYE Test
To qualify, Income Tax paid under PAYE (Pay As You Earn) must be greater than your non-PAYE income (e.g., rental income, dividends) in at least 3 of the preceding 4 years before investment. Additionally, non-PAYE income cannot exceed €50,000 during qualifying years.
For example:
- If you paid €30,000 in PAYE tax and earned €20,000 from other sources in a tax year, you meet the test.
- If non-PAYE income exceeds PAYE in any year, that year will not qualify.
Steps To Apply For SURE
Step 1: Ensure You Meet Eligibility Requirements
Validate whether you qualify based on employment status, taxes paid, and intended investment. Ensure your company meets Revenue’s definition of a qualifying trade.
Step 2: Prepare Investment and Documentation
- Register your business as an Irish Limited Company.
- Invest in the company by purchasing newly issued shares.
- Develop a strong business plan that outlines job creation and revenue growth.
Step 3: Submit Your Claim to Revenue
- Complete Form 11 or claim via the online Revenue MyEnquiries system.
- Provide supporting documentation, including:
- Proof of share subscription.
- Evidence of previous PAYE tax paid (e.g., tax records or P60 forms).
- Confirmation of company details.
Step 4: Receive Refund
After processing, Revenue will issue the refund directly to you. Processing times vary but generally take several months.
Maximizing SURE’s Benefits
- Strategize Your Claim Timeline
Apply tax relief to high-income/high-tax years first. This ensures you get the maximum claim early in your business development. - Combine with Other Reliefs
Leverage other Irish tax incentives like the Employment Investment Incentive Scheme (EIIS) or New Company Relief on Corporation Tax. - Retain Compliance
Meet all conditions for relief to avoid clawbacks:- Hold shares for at least 4 years.
- Maintain over 15% shareholding during the first year and comply with the business plan.
Common Pitfalls to Avoid
- Insufficient Documentation:
Missing relevant forms or proof of taxes paid can delay or deny relief. - Non-Qualifying Business Activity:
Ensure your business is a qualifying trade (Revenue provides a list of excluded activities). - Diluting Shareholding or Early Exit:
Selling shares too early or diluting ownership below 15% during the initial year could result in a clawback of relief.
Wrap Up
The Start-Up Relief for Entrepreneurs (SURE) is a valuable financial tool that transforms your previously paid taxes into startup capital. By reclaiming up to 41% of your investment, SURE significantly reduces the barriers to launching and growing a new business.
If you’re considering starting your own enterprise, SURE offers both practical benefits and a clear financial incentive to take the leap. To maximize its benefits and navigate its intricacies, consult a financial advisor or tax professional who can guide you through every step. Empower your entrepreneurial journey with SURE and build a business that contributes to Ireland’s dynamic economy.
