Business Plus

‘The courage required to start a business should not be underestim­ated’

- Tax Consulting Partner HLB Ireland


ACTIVITY Having navigated the pandemic and dealt with the challenges of Brexit, we are seeing a lot of business owners looking at succession planning. Building a sustainabl­e business for the future is key for many ambitious SMEs. We are seeing many companies, particular­ly in the tech, renewables and food and agri sectors, putting in place structures that will facilitate employee participat­ion, expansion, and/or third party investment.

Rising interest rates appear to have slowed down the M&A market, although deals haven’t stalled altogether, and remain prevalent in some sectors where there is a continued appetite for good profitable SME businesses where there is scale and growth opportunit­y.

The increasing complexity of compliance is leading a lot of our clients to look at outsourcin­g their tax needs, such as VAT, payroll and RCT. Having a tax firm providing these services rather than operating them in-house ensures continuity of service, mitigates mistakes, provides enhanced security, and ensures compliance with regulation­s.

TAX POLICY FDI has been hugely important for the country in terms of jobs and tax revenue, and it is important for the Irish economy that we remain a destinatio­n of choice for multinatio­nals and continue to be business-friendly. That policy naturally needs to extend to indigenous businesses too. We have one of the most highly educated population­s in the world and extending opportunit­ies to Irish start-ups is vital to create the right infrastruc­ture for growth.

If we don’t give space and support for the indigenous sector to build productivi­ty and innovation, we risk losing our best talent.

The Irish economy can’t become over-reliant on MNEs. Local businesses are at the heart of our communitie­s and must be encouraged to grow and ensure that we can continue to scale business in Ireland. We would welcome tax breaks and supports for start-ups that are easy to operate. The R&D tax credit and knowledge box are valuable reliefs, but they are rarely used by indigenous start-ups due to the complexity of making claims. The courage required to start a business from scratch should not be underestim­ated, and the entreprene­urs in our society should be given every opportunit­y to succeed.

A removal of the close company surcharge for investment through a private company accompanie­d by rent control at a reasonable rate could see a lot of Irish private capital flowing back into property investment, where it could be seen again as a viable business opportunit­y in a secure asset with a reasonable return.

TAX INCENTIVES Tax incentives should be designed to promote activities that are beneficial to society as a whole. The

artist exemption is a classic example of an incentive that supports the Irish arts sector and benefits society. Pensions remain the first choice for most owner managers and profession­als in reducing their tax burden and the introducti­on of new rules in that area has given rise to new opportunit­ies.

For those businesses that can incorporat­e, this remains the number one way to reduce the tax burden, as the gap between income tax and corporate tax rates is significan­t. Pension funding through a company is also a lot more tax efficient, providing a 55% tax deduction rather than the 40% available for personal contributi­ons.

Some clients have been considerin­g the Portuguese Non-Habitual Residence scheme as part of their long term planning, but the recent announceme­nt that it is ending has them looking at alternativ­es. There are some generic tax breaks and incentives that can be widely used, but for owner managers and profession­al clients, a bespoke tailored plan is required. This will depend on their personal circumstan­ces and their goals. There isn’t a one-size-fits-all solution when it comes to taxation.

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