The Business Expansion Scheme is to be revamped and renamed the Employment and Investment Incentive and the limit that can be raised by companies to be increased from €2m to €10m, Finance Minister Brian Lenihan TD said delivering Budget 2011.
The BES, which is used by many technology start-ups to raise seed funding prior to any serious venture capital investment, appears to be being broadened to enable companies across the wider economy and not just early stage businesses.
Known as the “friends and family” round in the investment world, the amount that can be raised in any one year will be increased from €1.5m to €2.5m.
In addition, Lenihan said the certification requirements will be simplified. The new incentive expires on 31 December 2013.
Tax exemptions for start-ups
In a move aimed at helping start-up companies, Lenihan said the three-year tax exemption scheme for start-up companies will be extended to include start-up companies that begin in 2011.
The scheme is being modified so that the value of the relief will be linked to the amount of employers’ PRSI paid by a company in an accounting period subject to the maximum of €5,000 per employee. If the amount of quality employers’ PRSI is lower than the reduction in corporation tax liability, relief will be based on the lower amount.
Enterprise Minister Batt O’Keeffe said the stimulus measures set out in the Budget, including the planned changes to the Business Expansion Scheme, the reduction in the air travel tax, the retrofit programme, and the extensions of the corporation tax exemption for new firms, PRSI exemption scheme and car scrappage scheme, will generate jobs and growth in the domestic economy.
“The programme of activation measures will keep workers close to the labour market so that they are ready to take up the jobs that will arise as the economy recovers,” said O’Keeffe.
He said the Budget balances the need to broaden the tax base while at the same time protecting the enterprise community.
“In particular, our top marginal tax rates will not disimprove and our tax wedge will remain competitive,” O’Keefe said.