Finance Bill provisions for entrepreneurs come under fire

One of Ireland’s highest-profile technology investors has severely criticised the Department of Finance for restrictions on tax relief for investors imposed in last week’s Finance Bill.

Brian Caulfield, a partner in Draper Esprit and chairman of the Irish Venture Capital Association, said he believed there was a "cultural antipathy" towards entrepreneurs from within the department.

Mr Caulfield described elements of the Finance Bill, including a requirement that beneficiaries of capital gains tax relief must be company directors, as “simply insane”.

“[It] will pit founders against each other when boards are being restructured. It’s very uncommon for the board of a VC-backed company to have any more than one or perhaps two founder directors. A founder stepping off the board loses the relief,” he said.

He also criticised a requirement that a director must have more than 15 per cent of the company’s equity to gain the relief because it would “discourage companies from raising the cash they need to build their business because the dilutive impact of the funding may push them below the threshold”.

Cynical

Mr Caulfield, who is also a director of

The Irish Times, said the Government's budgetary provisions relating to the reduction of capital gains tax to 20 per cent for investors and entrepreneurs were "cynical".

“I think the changes were quite cynically designed to garner [headlines] while ensuring that the benefit was minimal . . . and any benefit was accessible to the absolute minimum number of people,” he said.

Mr Caulfield said self-employed people, who are subject to higher universal social charge rates on incomes over €100,000 than equivalent- earning PAYE employees, are targeted because of a suspicion in the department they don’t pay their taxes.

“There remains a cultural antipathy to entrepreneurs and the self-employed that sees them as a legitimate target on the basis that they are (almost by definition) cheating on their taxes. In spite of all the evidence to the contrary, this means that concessions for entrepreneurs are not a priority. This antipathy is widely shared within the department.”

The department had not responded to Mr Caulfield’s criticisms before publication.