By Kealan Lennon, CEO & Founder, CleverCards
Christmas is a time for celebration, but it is also a time of significant financial pressure. This is true for parents, gift-givers, party-throwers and increasingly for small and medium-sized business owners across the country. While customers must tighten their budgets and shop around for the best deals, the nation’s SMEs face the challenge of navigating the Christmas period amid cash flow pressures, year-end taxes demands and staff bonuses.
While much of the national conversation centres on our reliance on corporation tax receipts from a handful of large FDI companies, the reality is that PAYE and VAT contributions from Ireland’s SMEs compete with this figure. As you do your Christmas shopping this year, take a moment to notice the businesses that line our streets, from the café owner, the haulier, the tradesperson to the pharmacist and the local accountant. These are the true faces of entrepreneurship and tax sources that keep our public services running. Yet despite this fact, SMEs consistently report feeling less supported at home compared to their multinational counterparts.
This year’s budget passed with Irish businesses and entrepreneurs largely left out of the picture again. The budget headlines focused on minor tweaks to corporate tax and record receipts from global giants. Meanwhile, the backbone of our economy, the 270,000 owner-operated businesses employing millions across the country, were left wondering when policy will catch up with their reality. Now is the time to consider how government and practice must evolve to better support this community.
I say this as someone who works closely with SMEs and engages daily with entrepreneurs who are trying to do more with less - a challenge I understand as an entrepreneur in Ireland myself. For years, I’ve both worked with global corporations and built a global payments business organically from scratch. I know how vital foreign direct investment (FDI) has been for Ireland and how excellently it was supported by the IDA. But it is high time the same support is given to home-grown talent and entrepreneurs - those who employ locally, pay locally and keep our communities alive.
Amid all of this, there is one existing support that many businesses still overlook. The Small Benefit Tax Exemption, now €1,500 per employee, can deliver immediate, tax-efficient benefits to businesses and their staff this Christmas. The exemption is completely tax-free - there’s no PAYE, no USC, no employee or employer PRSI, no BIK, provided it is a non-cash benefit. Yet, many Irish businesses underuse or rush to implement it at the last minute, leaving real money behind. It’s a simple, smart policy measure - but execution is lacking. You can now create your order here.
The exemption is not just a once-off December bonus. It can be used to reward high performers all year round, recognise long service or ease cost-of-living pressures at vital moments. Under normal circumstances, when PAYE, PRSI & USC are factored in, €10,000 in total employee gifts actually costs a business €23,135. But if the company uses a non-cash benefit, like a CleverCard, to give out a well deserved €10k across Christmas bonuses, they can do so tax free under the small benefit tax exemption. That is an overall saving of €13,135, at a time when it’s needed most!
Consider a business with 20 employees, €30,000 in net value can go directly into employees’ pockets, with every cent flowing back into the local economy. If every Irish SME took advantage of this, the national difference would reach hundreds of millions without the need for a single new law or subsidy.
There is no doubt more could be done to support Irish businesses and entrepreneurs: simplify tax administration, cut employer PRSI, extend R&D credits to smaller firms and provide easier access to capital. These investments in Ireland’s most reliable economic engine will be returned tenfold. But in the meantime, as we wait for this fact to be acted upon, employers can take advantage of what is readily available.
This year, use the Small Benefit Tax Exemption, the support that already exists. Reward those who make Christmas possible and ensure they receive instant recognition for being the backbone of growth, innovation, and local jobs in the Irish economy. If you don’t, you are quite literally leaving money on the table, money that is especially missed this time of year.
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