Irish Software Association Calls For Venture Capital Tax Incentives

by Jason Gorringe, Tax-News.com, London

18 November 2004

Speaking following the publication of the Irish Software Association's pre-Budget submission, ISA chairman Cathal Friel has reiterated calls for tax incentives to encourage venture capital investment in the Republic, both by domestic and international investors.

Key requests made in the ISA's Budget Submission 2005 were for:

• An increase in the Seed Capital Scheme and the BES (Business Expansion Scheme) to €5 million per company;
• Increased personal limits for these schemes to €300,000 per investor per annum;
• Increased government spending on technology from SME's;
• A review of the R&D tax credit to allow more indigenous companies to benefit from the tax credit; and
• Amendments to the legislation governing the tax treatment of employee stock options under a revenue approved scheme.

In an interview with the Irish Independent this week, Mr Friel elaborated on the Association's demands, explaining that:

"Irish people have invested over $40bn in property, both here and abroad, between 1998 and 2003, whereas less than $1bn was invested in technology start-ups in the same period."

He went on to add that:

"The Business Expansion Scheme has a limit of €35,000 per individual investor, whereas in the UK an investor can plough as much as £1m into a venture capital trust as a tax shelter. With the Irish economy at near full employment, there must be strong incentives to persuade entrepreneurs to give up well-paid jobs for the insecurity of a start-up, and access to plentiful venture capital funds is needed."

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