Ireland is rightly known as one of the tech hubs of Europe and it is in all of our interests to see the start-up community flourish here.
Unfortunately, we are seeing a worrying trend in recent times of a disconnect between the political and business sector, with the Web Summit debacle in particular compounding this view. The start-up community have a vital role to play in Ireland’s recovery, and when we hear someone like Minister Bruton saying that he wants this country to be the global centre for start-ups, it is an encouraging sign. Or so it seems.
Because for all the rhetoric, the government have a funny way of expressing this global vision.Let’s take the capital gain tax that was announced in the 2016 Finance Bill. Capital gains tax is a tax levied on profit from the sale of shares in a company. When start-ups and investors are planning on setting up a business, it is one of the first things that they have to consider. If we look at how we compare to the UK – our closest neighbour and competitor when it comes to offering the best business environment to work in – we see an alarming number of shortcomings on our side.
Entrepreneur Relief provides for a reduced rate of Capital Gains Tax = 20%The Irish Entrepreneur Relief limit = €1 million (lifetime)
Business asset held by owner to qualify for relief = 3 years
Entrepreneur Relief provides for a reduced rate of Capital Gains Tax = 10%
The UK Entrepreneur System = €14 million (lifetime)
Business asset held by owner to qualify for relief = 1 year
If you take into consideration our first comparison on qualifying for entrepreneur relief on capital gains rate – we charge twice as much as the UK, which definitely affects our competitiveness. When we look at the Irish Entrepreneur Relief System limit in the 2016 Finance Bill, we compare awfully to the UK – who offer 14 times more relief than we do to investors and entrepreneurs. When you look at how long a business asset has to be owned by an owner before he can qualify for relief, it takes 3 times longer in Ireland than it does in the UK.
This means that if an entrepreneur sets up a business in Ireland, he has to hold on to the business for 3 years before selling it – which is an unnecessary hindrance for Irish entrepreneur’s flexibility – and not one they face in the UK, while the figures that we are analysing are definitely large – they need to be considered in the terms of serial entrepreneurs and investors, in industries that can have global impact and can play a significant role in job creation in Ireland.
The worrying fact is that these are REVISED governmental figures, after they noticed that they had made a significant amount of errors when the bill was initially published.
The current mind frame of the government shows that we are allowing ourselves to be beaten on nearly all fronts by our nearest competitor – the UK. Most frustratingly these types of mistakes that are easily avoidable – and with it easier than ever for Irish people to move and do business in the UK, Minister Bruton should be doing everything in his power to ensure that we keep our top talent in Ireland, as well as allowing Irish businesses to expand. In this day and age – as shown by the Web Summit moving to Lisbon for the next 3 years -entrepreneurs and start – ups don’t wait around.
If we truly want Ireland to be the global centre for start-ups, then why are we penalising them so harshly?
All that we are doing is giving the UK the advantage, in a time when we can least afford to.
We need people in government who have a real understanding of the business dynamics that are needed going forward.
I firmly believe that with my background of co-founding Lir Chocolate, where we ended up employing over 250 amount of people that I have unique insights into how we can bridge the gap that the government has (seemingly unwittingly) formed between the political and investment/entrepreneur world.
Let’s do all we can in keeping our talent where it belongs and can thrive – in Ireland.