What is the SURE scheme?

So, you’ve just incorporated a new company (or thinking about it) and have heard about a few tax incentives schemes which can help fund the company. The SURE scheme is one such scheme and we will go into detail on who can claim it, how much can be claimed and how to go about claiming.

SURE stands for “Start Up Refund for Entrepreneurs”. It is a tax refund scheme for employees who leave employment and start their own limited companies. Ultimately you could get a refund of up to 41% of your investment in your new company!

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We’re going to address the following points of the scheme:

  • Conditions you need to meet to qualify for the scheme
  • Conditions your company needs to meet to qualify for the scheme
  • Things which are specifically not allowed
  • What “qualifying trading activities” are
  • How Research & Development is defined
  • How much you can get refunded
    How to apply

How do I qualify for the scheme?

To qualify for the scheme, you need to meet the following conditions:

  • You establish a limited company
  • The company is less than 2 years old
    You earned mostly PAYE income over the last 4 years
  • The new company will employ you on a full-time basis within 6 months (as a director or employee)
  • You invest cash in the company by purchasing new shares (max. €100k/year)
  • You keep the shares for at least 4 years
  • You own at least 15% of the company for 12 months
  • You don’t own more than 15% of another company for the previous 12 months

How does the company qualify for the scheme?

The company also needs to meet certain conditions, namely:

  • Company must carry out mainly “qualifying trading activities” (we’ll go into this further down below)
  • It must be an “unquoted” company (i.e. not traded on a stock exchange)
  • Must be a Micro, Small or Medium-sized company*
  • Be incorporated, tax resident and trading in Ireland (or another EEA country)
  • Physically located in Ireland
  • The company’s Share Capital is “fully paid up” for 3 years
  • The investment into the company is used to create jobs or spent on R&D activities (we’ll go into this further too)

*the term is defined by the Companies Act and means the company has turnover of less than €20m, net assets less than €10m and does not employ more than 250 people.

What are the scheme restrictions?

There are certain things companies can’t do – here are some of the restrictions:

  • Can’t have a special trading arrangement with your former employer company
  • Can’t carry on a trade similar to any other trade which you used to have a controlling interest in
  • Can’t be a firm “in difficulty” (i.e. insolvent)
  • Can’t control or be controlled by a subsidiary (unless a qualifying ‘bona fide’ subsidiary)

What are “Qualifying Trading Activities”?

So only certain companies can avail of the scheme – basically if your company does any of the below, you can’t apply for the scheme:

  • Financing activities (e.g. providing loans, etc)
  • Investing activities (e.g. dealing in commodities, shares, securities)
  • Providing professional services (e.g. solicitors, doctors, architects, accountants etc.)
  • Companies developing land
  • Companies in the forestry, coal, steel and shipbuilding industries
  • Film production
  • Once of speculative transactions (e.g. holding company)

We’re not trading yet – can we qualify if we spend on Research & Development?

Let’s say you started a company but need to make a lot of investment in researching and developing your products (e.g. technology, medical equipment). In this case you may not be up and trading within 2 years, but you can still qualify for the scheme if:

  • the company starts trading within two years of the investment being made
  • all the money invested in the company through share issues was spent on R&D before the end of year 3.

Or:

  • the company spent all the money dedicated to R&D
  • the company disposed of specified intangible assets before the date that
  • is one month before the end of the year 4.

The following conditions need to be met for spend to be defined as Research & Development:

  • Science or Technology related
  • Carry out basic/applied research, or experimental activities
  • Seek to achieve advancement
  • Resolve uncertainty.

Revenue will ask for evidence of R&D spend, so keep good accounting records. They will also want to see all of the research project documentation.

How much can I get refunded to me?

That all depends on how much you’ve invested and how much PAYE you’ve paid. At its most simplistic level, in theory, an investment of €100k could get up to €41k refunded. Let’s go through an example:

Gary started a company in 2020 and invested €50k by way of share issue straight after formation. He is entitled to claim SURE based on tax paid in 2019 and 2018. Gary had an annual PAYE salary of €30k (he’s also a single person).

Therefore, he claims €30k of his investment in 2019 and the remaining €20,000 in 2018. He probably paid PAYE at a rate of 20% each year (€6,000) and had tax credits of €3,300, meaning his total PAYE for 2019 was €2,700 and for 2018 also €2,700.

So, he can now claim €2,700 for 2019 and €2,700 for 2018. There is a handy online calculator here: http://www.sure.gov.ie/Calculator

How do I apply for the scheme?

You complete this form called FORM SURE C (for your company) and also a FORM SURE I (for each individual investor) and send it to the Revenue Commissioners:

By post:

Office of Revenue Commissioners
Incentives and Financial Services Branch
New Stamping Building
Dublin Castle, Dublin 2.

By email:

[email protected]

https://www.revenue.ie/en/starting-a-business/documents/form-sure-c.pdf
https://www.revenue.ie/en/starting-a-business/documents/form-sure-i.pdf

CONCLUSION

So there you have it – hopefully the SURE scheme is a little clearer now and you will be able to qualify and get a refund of PAYE!
Of course, if you are still boggled by it or just want to make sure it is done right, book a free Discovery Call with us today.

If you just want to ask us a question – call us on clarity.fm/marksweetman

Disclaimer: This guide is for informational purposes only and contains a general summary of taxes in Ireland and is not a complete or definitive statement of specific tax obligations that may arise. Specific accounting and tax advice should always be obtained where appropriate.

Warning: If you invest in this product you may lose some or all of the money you invest.
This marketing information has been provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives, financial position, risk attitude, liquidity needs, capital security needs and / or capacity for loss of any particular person. It should not be relied upon to make investment decisions.

Mark Sweetman, ACA

Mark Sweetman, ACA

As a Chartered Accountant I've built my experience working within the SaaS and digital technology industries, growing early-stage businesses from the inside. I help digital entrepreneurs understand their companies and ensure they have all the tools they require to succeed and thrive. I love adopting new tech solutions and making use of these to increase efficiency within our clients' businesses.