Irish risk takers penalised by tax, says Avolon chief
IRELAND’S tax system continues to penalise risk takers and the country is in danger of being left behind in a new wave of global digital entrepreneurship, aviation executive Dómhnal Slattery has warned the Government.
The CEO and co-founder of Dublin-based aircraft leasing giant Avolon, Mr Slattery told an Enterprise Ireland event that boosting Ireland’s level of entrepreneurship can’t happen “with a tax structure that disproportionately penalises risk takers”.
“We need a tax structure that allows risk-taking to flourish,” he urged the Government.
“We need a capital gains mechanism that doesn’t send our startups elsewhere. We need tax efficient ways to aid entrepreneurs attract high quality employees, appropriately incentivised,” added Mr Slattery.
The aviation entrepreneur founded aircraft lessor International Aviation Management and sold it in 2001 to RBS for about €45m.
A former Guinness Peat Aviation executive, he co-founded Avolon in 2010, securing billions of dollars of backing from private equity.
The firm floated on the New
York Stock Exchange in 2014, and was sold the following year to Bohai Leasing for $2.5bn (€2.2bn). The sale netted Mr Slattery about €31m.
Mr Slattery told the Enterprise Ireland event investors also needed to be “rewarded for their bravery, particularly at the early funding stage”.
“Ireland’s capital gains tax environment and the very modest tax incentives available for founders currently act as major disincentives, and this is a lost opportunity for the Irish economy,” he said.
He called for greater supports and incentives for founders to encourage them to realise their exits in Ireland, and then reinvest their capital here.
“We believe increased benefits would flow to the State in terms of tax receipts and such a move would also bring us into line with most other countries in the EU on founder taxation, particularly our nearest neighbours, the UK,” said Mr Slattery.
The Government has been frequently criticised for failing to provide adequate tax incentives for startups and founders.
Entrepreneurs selling businesses pay 10pc capital gains tax on the first €1m gain they make from the sale of a business.
But it’s a lifetime limit, rather than €1m relief on the sale of each business.
After that, their gains are taxed at 33pc.
Mr Slattery also said that it appears Ireland often lacks the “cultural ambition” needed to scale businesses to become global.