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Corporation tax exemption for start up companies

Certain start-up companies carrying on a new business may qualify for relief for corporation tax on business profits in their first three years of trading. The relief is granted by reducing the corporation tax payable on the profits of the new trade and gains on the disposal of any assets used for the purposes of the new trade.

The amount of relief available in any year is directly linked to the amount of Employer's PRSI paid in the same year and is capped at EUR 40,000 per annum. Where the amount of the corporation tax liability is less than EUR 40,000 in any year, any unused relief from the three-year period may be aggregated and carried forward against future trading profits of the company.

The relief takes the form of a reduction in the corporation tax liability relating to the new trade (including chargeable gains on assets used in the trade) and is capped at the amount of the employer's social insurance contributions made on behalf of the company's employees in the period.

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