BES / SEED relief - Certification as internationally traded service

Hi,

This is a tax and business query so hopefully its posted in the right place. I am in the process of setting up my own company and am looking to get all possible tax incentives that may be available. As such i think i might be able to avail of either the BES or SEED Capital Scheme. However the only qualifying activities that the company could qualify is either:

1. an internationally traded service; or
2. certain activities which have the potential to become internationally traded services.

That's all very well and i'm reasonably conviced that they qualify as such services, however i need to get a certificate from either Dublin Couinty Enterprise Board or Enterprise Ireland to state that they would qualify as such.

So after all that my question to any of you AAM'ers out there is, does anyone have any experience in going to either DCEB or EI looking for such a certificate. Which is the right department to contact? What do they normally look for? I have contacted both over the phone and they have told me to make a submission to them. Obviously I would really like to give them as little opportunity as possible to say no.

Any comments greatly appreciated.

Hi Newby,
I am trying to avail of the seed capital scheme to start up a small publishing business. I have been in contact with The D.E.B. and was advised that the first step was to apply for the mentor programme. I did this last December.I am still waiting on an appointment.So far they haven't inspired me, considering the fact that these people who cannot reply to an email will be advising me how to run a business. We'll see....I'll let you know how I get on and am interested to see how you get on.
Good Luck!!!!!!!
Ned

Hi Folks,
I looked into this and I seriously do not think it is worth the bother. As you are the owner of the business, the only relief you would personally get from BES/Seed Capital is to get tax back on the gross amount invested. You also have to jump through hoops for your business to qualify. In my opinion, it is only useful if you are looking for further capital from outside investors, but they will not look at you unless you are well off the ground...
My approach was to treat all money invested in my compnay as a directors loan to the company. Thus I could pay myself in gross terms as I can legitimately call it a loan repayment. Thus instead of having a share capital of 150k, I have a share capital of 300euro, the rest as loans to the company with will be repaid without invcome tax deduction as revenues increase

Might not work for everyone but makes eminent sense in my situation

Hi Folks,
I am in two minds whether to bother with the seed capital scheme but feel that I could jump through a few hoops to get the tax refund if it's available to help start a business.I've been earning between 40,000 and 55000 euros per year for the past 5/6 years, so I hope to claim back about 40000euros(Year1:12000x 42%,Year 2: 12000x42%, 3:15000x42%,Year4: 15000x42%,Year5 15000X42%,Year 6:20000x 42%).Not sure if all this is as straight forward as I would hope and I realise I will have to invest heavily to do this.Otherwise, I may just claim for the previous three years and claim again at a later stage if I go back to working in the P.A.Y.E. sector. I believe it is possible to claim the 6 years refund back in two separate claims.
Regarding the loan idea as opposed to investing all as share capital, can someone direct me to somewhere or someone who could explain how I might go about this and will an Enterprise Board approve of this loan idea ?
Thanx all,
ned

Ned,
You will only be able to claim tax back up to the value of the gross amount you are investing in the business. So in order to claim back the tax you are calculating, you must invest a lot more than this into the share capital of the company. In additoin, say you are investing 100k as share capital in your new business, the tax relief calculation is not as you think. You must choose a year to begin from in hte last 6 years, and count up 100k in gross earnings from the start of that date, see what tax you paid on this figure, and the tax is what you get back.
In the loan scenario, you still invest 100k, 99.9k as a loan to the company, 100euro as share capital. You can then draw back the 99.9k as a loan repayment over the following 2 years, paying no PAYE in the process.
You should find an accountant to discuss these issues with

Hi - curious as to outcome on this - I've also looked at it but situation is that I'd have to borrow to provide money to provide share capital. I've been a top rate PAYE earner for past few years and tax refund on 200K investment in new company (again assuming all the hoops of CEBs etc can be jumped through) would be about 72K (sounds great). BUT I need to pay back loan - only potential income via the company by way of salary and so I'd have to gross up director's salary to take account of capital and interest repayments on loan. So roughly say living 40K - Annual Cap & Int (over 5 yr repayment) 51K means a net director's salary of 91K grossed up to approx 150K giving tax each year of about 50K for each of those 5 years (have allowed for relief on interest on borrowing for shares. Looks a bit of a swizz to me compared to sole trader option. Am I right in this conclusion ???
I'm also aware that this scheme is on hold pending Brussels approval of the Finance Act 2007 suggestions.