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Capital Gains Tax Relief For Entrepreneurs

December 19, 2016 Tax Advice 0 Comment

In Budget 2017 there was good news for entrepreneurs and start-up businesses as the capital gains tax relief rate for entrepreneurs was reduced from 20pc to 10pc.

The new 10pc rate will bring Ireland closer in line with competitive CGT rates on the sale of a business in the UK. The Finance Minister also confirmed that the €1m lifetime limit for the 10% rate will be reviewed in future budgets.

There is still a significant gap between the lifetime limit in Ireland of €1m and that of the UK is £10m STG.

Summary information regarding Capital Gains Tax Relief for Entrepreneurs

Download The Capital Gains Tax Relief Document

  1. 10% rate of CGT applies in respect of a chargeable gain or chargeable gains on a disposal or disposals of qualifying business assets on or after 1 January 2017 up to a lifetime limit of €1m. Rate currently 20%.
  2. Relates to a qualifying business which is a business other than the holding of securities or other assets as investments, the holding of development land or the development or letting of land.
  3. Relief applies to individuals only.
  4. Qualifying business assets must have been owned by that individual for a continuous period of 3 years in the 5 years immediately prior to the disposal of those assets.
  5. Where a business is carried on by a company, individuals seeking to qualify for the relief must own not less than 5% of the ordinary shares in the qualifying company or 5% of the ordinary shares in a holding company of a qualifying group
  6. The individual must have been a director or employee of the qualifying company (or companies in a qualifying group) who is or was required to spend not less than 50% of his or her time in the service of the company or companies in a managerial or technical capacity and has served in that capacity for a continuous period of 3 years in the 5 years immediately prior to the disposal of the chargeable business assets
  7. Subject to the conditions attaching to the relief being met, the relief can apply in the following situations:
  • Share buybacks
  • Company liquidations
  • Double holding company structures
  • Partnership assets

Relief does not apply to the following assets:

  • Shares, securities or other assets held as investments
  • Development land
  • Assets on the disposal of which no chargeable gain would arise
  • Assets personally owned outside a company, even where such assets are used by the company.

Download The Capital Gains Tax Relief Document

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For related enquiries, further clarification and assistance with Tax matters contact Joe Cunnane at TRA Professional Services

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