A Budget Focused on Small Business

12th December, 2012


Our economy has to undertake a difficult transition from one driven by property and debt to one built on enterprise, innovation and exports.

The Action Plan for Jobs is our strategy to drive that transition.

We have a long way togo but we are seeing real progress

  • The CSO has recorded a 12,000 increase in private sector employment in the last twelve months. This is the first increase in 4 years
  • Export orientated business have added 20,000 net new jobs in the past 18 months. In the previous 3 years, they shed 70,000 jobs

This year’s Budget heralds significant new measures to support enterprise and in particular small business.

This leaflet highlights the main improvements – new help for start-ups, better access to finance, support for businesses to expand and to take on new recruits. It is part of wider changes to make small business central to enterprise strategy.


New Help for Start Up:

  • It extends the Seed Capital Scheme to 2020: Under this scheme, if you start up and work full-time in your own company, you can claim
    back the PAYE income tax you paid in the previous six years to invest equity into a company (subscribed as shares) engaged in a qualifying trade. The amount of relief is restricted to the amount of the investment. The scheme is now open to a much wider range of sectors and the recoverable tax can now be up to €100,000 in each of the six look back years.
  • It improves the Corporate Tax Exemption for the first three years of a start-up: The relief is worth up to €5,000 per employee up to a maximum tax write off of €40,000 in each of the first three years. From 2013, if the relief is not used in the first three years it can be carried forward
  • Funding is provided for the first year of Microfinance which offers loans of up to €25,000 for micro business refused credit from the banks (Email: info@microfinanceireland.ie; Tel: 2601007)


Better Access to Finance:

  • New funds are being established or extended which will target the difficulties for business to get finance:
    • Funding of €175million from Enterprise Ireland is expected to leverage a further €525million in private sector funding to create a total of €700million seed and venture capital. Well over 100 innovative Irish companies are expected to benefit, with thousands of jobs created and hundreds of millions of euros in additional exports generated. Full details will be announced as part of Action
      Plan for Jobs 2013
    • Extra funding of €25million will go into the Development Capital Scheme which will now provide a total of
      €225million in funding to mid-sized indigenous firms, to target the development of a strong mittelstand-type indigenous sector
    • Funding is provided for the first year of the Credit Guarantee Scheme, which aims to provide credit to job-creating SMEs who
      currently struggle to get finance from the banks. It is intended to address market failure affecting commercially viable businesses in two specific situations – namely, where businesses have insufficient collateral, and where businesses operate in sectors with which the banks are not familiar. It provides a 75% State guarantee to banks against losses on qualifying loans to firms with growth and job creation potential.
    • A range of support funds for the SME sector, initially ranging in size from €100million to €400million, to provide equity, credit and recovery investment will be established by the National Pension Reserve Fund (NPRF)
    • Increase to €4billion the lending target for the two pillar banks for 2013. Both banks are on course to meet their 2012 targets of € 3.5billion
  • The Credit Review Office is being strengthened to handle more cases where SMEs are refused lending by the
    banks of up to €500,000. The CRO has overturned over half of the bank lending decisions which have been appealed to it.




The Employment and Investment Incentive Scheme is being extended to 2020. It provides 30% tax relief for investors in new shares of a company (or a fund investing in a number of companies). This can be used by companies in most sectors (excluding property, hotels, nursing homes and professional services) for the use of their business.


Supporting Business to Expand:

  • The threshold for a business to calculate VAT on Cash Receipts is being increased from from €1m to €1.25m. Under the ‘cash-receipts’ basis, VAT on sales is calculated based on when payment is received, rather than when the invoice is issued. The increase to €1.25m will
    be a significant benefit in cash flow and reduce the need for working capital.
  • Up to €200,000 can now be spent on Research and Development and get a full 25% tax credit as well as standard 12.5% (i.e. without deduction of the R and D spend in 2003 which applies to larger R and D spending)
  • The Foreign Earnings Deduction encourages a business to send staff into new markets. It has been extended to include African countries, as well as Brazil, Russia, India, China or South Africa. This offers up to €35,000 tax free to the individual once they spend at least 60 days in these markets. The relief is based on the % of the employee’s time spent in these markets.
  • The new Potential Exporters Division of Enterprise Ireland aims to target 2,000 Irish businesses next year who could enter
    export markets


Taking on New Recruits

  • A new PlusOneinitiative is being finalized which will give employers a simple subsidy to hire people who have been out of work for 12 months. It is intended that this scheme will replace Revenue Job Assist and the PRSI exemption scheme, which have been criticised by employers as being too cumbersome.
    • There will be 2,500 new JobBridge places increasing the number of places available to 8,500. The scheme allows a business to take on a person in a trainee capacity, free of charge for 6-9 months, and provides PRSI relief if they take them on full time.
      Participants receive €50 per week on top of their welfare payment.


Putting Small Business First 

  • A Small Business Division has been established in Enterprise Ireland. This brings small business into the heart of national enterprise policy for the first time:
    • It will operate as a centre of excellence driving high standards and innovation in service to small business
    • Local Enterprise Offices (LEOs) in each local authority will become the “first stop shop” for
      small business to access national and local agencies of relevance to small business (e.g. Microfinance Ireland, Revenue, Company Registration Office (CRO) etc.
    • The LEOs which will replace the County Enterprise Offices (CEBs) and will offer an enhanced offering to business, including access to Microfinance as well as grants, training, mentoring, and other soft supports
    • The Minister for Finance is considering the introduction of a simplified tax regime for the established 200,000 micro businesseswith a turnover of up to €75,000. It includes options such as:
      • Calculating taxable income on a simple cash receipts and payments basis
      • A standard expense deduction regime for expenses that require a lot of record keeping
      • Allowing 100% write off in the year of purchase of small items like office equipment

The consultation on these ideas will close on 28th February 2013