Start-up relief for entrepreneurs (SURE)
The broad principles are similar to those in respect of EIIS. The investment is made by a person who works in the company for at least 12 months.
Relief for the investment is made against total income in the year of investment. The individual may elect to have the relief deducted from total income in any of the previous six years before the shares were issued.
The SURE Investment
The individual may make two investments under the scheme. The second must be made within two years of the first investment.
The minimum investment is €250 and the maximum investment is €100,000 per year. The investment is generally a cash investment for fully paid-up shares.
Subject to conditions reimbursement of expenses incurred on behalf of the company may be made by the investment.
The investment for which relief is given is limited to €100,000 in a given year. If the investment exceed this amount, it may be carried forward and relieved in the subsequent year . There are rules as to priority when different types of relief of being carried forward.
SURE Investor Conditions
The investor must
- hold at least 15% of the share capital of the company for 12 months after its issue
- hold the shares for at least four years
- have derived his or her income principally from PAYE sources in previous years (but in certain cases not required for the year before the investment)
- enter full-time employment for a 12 month period with the company as an employee or director either within the year in which the investment is made within six months of the date of its issue
- must not be employed anywhere else during this period except no more than 10 hours a week
- must not receive any other payment other than reasonable remuneration and expenses in the three years after share issue
- during the 12 months before must not have held any more than 15% of the share capital loan capital voting rights of any other company (exceptions for dormant, small-scale and certain other companies)
- not utilise SURE for the purpose of avoiding tax only not enter any agreement or arrangement to eliminate risk from the investment
Application to Revenue
There is provision for application to Revenue for confirmation that the company qualifies. This is limited to certain conditions but does not apply to all provisions.
- statement by the company to the effect that the company is a qualifying company
- The company’s name, address and tax reference number
- The date the shares were issued, the class of share issue, the amount subscribed for the shares and the number of shares issued
- The investor’s name, address and PPSN
- The date on which 30% of the funds raised has been spent on a qualifying purpose
- The amount of the investment which qualifies for relief under s507 TCA 1997 as reduced, if necessary, by the operation of s497 or s508R TCA 1997
- Any other information as the Revenue Commissioners may reasonably require
- It may be in such form as may be prescribed.
SURE investors may not qualify until they received the statement of qualification The
Clawback of Relief
Relief is not allowed unless the raising of risk capital by the company and a subscription for shares are bona fides commercial purposes and do not form part of a scheme or arrangement the main purpose of or one of the main purposes of which is the avoidance of tax.
Where shares in a qualifying company are disposed of before the end of the relevant period and the disposal proceeds are not returned the qualifying investors regulate they are treated as having made a part disposal of the shares. They are deemed to have received an amount equal to the portion attributable to their shareholding of shares of the market value of the subsidiary at the date of disposal or actual proceeds for the disposal of her.
There is a clawback of relief if the investor receives value from the qualifying company within the relevant period. If there is any value paid for the company or its connected group companies whether by repayment repurchase of shares or other indirect or equivalent arrangements, there is deemed to be a receipt of value. The amount of relief is reduced by the amount of the value received.
Receipt of Value
The definition of receipt of value is extensive and includes
- any repayment redemption or repurchase of share capital and securities
- payments in respect of giving up of any such rights
- repayment of debt other than ordinary trade at or pre-existing bona fides debts,
- release or waiver of any liability
- loans or advances directly or indirectly made benefit facility provided for the individual
- transfer of assets at undervalue or overvalue payments other than a director or employee
- similar such arrangements if undertaken by persons connected with the company
- Where a company or group company acquires any shares in the EIIS/or company from a makes a payment cancellation or extinguishment of shares to certain persons other than the claimant there is deemed to be a receipt of value and clawback.
Where the company redeems or purchases shares from a member other than the investor there will not be a clawback if the investment was not made within the company or the group within the prior 18 months and there is no (EIIS/or SURE) investment in respect of which a claim is made within the following 12 months.
Withdrawal of Relief
If the relief is clawed back because of an incorrect statement of qualification by the company or because it ceases to be a qualifying company and assessment of corporation tax is made on it in respect of the relief incorrectly given.
If the relief is withdrawn due to investor -related conditions an assessment is made on the investor in respect of the relief incorrectly given. They include
- risk reduction measures
- replacement capital
- other members receive value
- tax avoidance reasons
- investors no longer qualify investor
Similar provisions apply to the withdrawal of SURE relief.
In the usual way penalties et cetera may arise if the claims are made incorrectly. This can include publication as a tax defaulter.
The company and connected parties have an obligation to notify Revenue in writing within 60 days of any event that triggers withdrawal of relief.