'Startups are used to being largely ignored in budgetary matters in Ireland'

These are the incentives startups want in the Budget – but no one’s holding their breath.

By DC Cahalane CEO, Republic of Work

ANOTHER YEAR, ANOTHER BUDGET. And while I’d love to be optimistic that under our younger, more forward-thinking Taoiseach that this year might be the one when Ireland embraces its entrepreneurs, small enterprises and startups, I’m not holding my breath.

Entrepreneurs and startups are used to being largely ignored in budgetary matters in Ireland.

Sure the occasional policy change directed at larger businesses sometimes has a knock-on effect on small enterprise, but a lack of meaningful lobbying or direct representation means startups rarely see any direct measures aimed at them.

I think in government circles there’s a general lack of understanding about the real needs of entrepreneurs. Maybe if we had a few more entrepreneurs on the pews of the Dáil things would change? But that’s a discussion for another time.

So we get left with a culture of handouts, instead of hand-ups, where everything becomes about financial supports delivered through Enterprise Ireland and the Local Enterprise Offices.

They do excellent work but can’t be left as the only line of support for those seeking to start businesses in Ireland.

As the types of businesses starting in Ireland get more innovative, they often get caught up by bureaucracy that was never designed to cater for their kind of innovation.

We really need a national entrepreneurial environment driven by national policy that makes Ireland a great place to start and scale a business.

So what will we see in Budget 2018? It’s difficult to say, but based on conversations I’ve been part of, here are some small things the entrepreneurs of Ireland really want included:

1. Meaningful progress on employee share ownership trusts, an ongoing oversight which creates a huge hiring disadvantage for startups in Ireland at the moment.

Startups traditionally survive the early days by incentivising employees using vested shares and other performance-based rewards in ways that are very commonplace in other jurisdictions but are heavily taxed in Ireland.

2. Some relief or benefit for new businesses in hiring their first employees. Often new startups will wait as long as possible before hiring employees due to the added complexity that it brings in terms of paperwork and payroll taxes.

3. Improvements in the taxation of investment into startups would be hugely welcome. Right now, the UK, in particular, is a far more attractive environment for private individuals to invest in startup businesses.

This fact has led to numerous Irish startups moving north to Belfast or setting up operations there so that their investors can benefit from the very generous tax breaks in return for backing smaller, riskier firms.

4. Finally, a rethink of last year’s capital gains tax improvement – which, while welcome, was completely impractical in terms of implementation.

In order to receive the improved benefit, a founder had to still own a meaningful share of around 15% of the company at exit, a scenario which rarely exists in any company that expands by taking on venture capital.

In general it would great to see any benefits that could be delivered directly through changes in the tax code instead of funnelling resources through already overworked state bodies. We wait with bated breath.

DC Cahalane is CEO of Republic of WorkHe has previously led growth and marketing at high-growth Irish companies like Teamwork and Trustev.

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