For business owners in Ireland, selling a company or shares can bring a significant Capital Gains Tax (CGT ) bill. To support entrepreneurship and reward those who’ve built successful businesses, the government offers specific tax reliefs designed to ease that burden, one of the most notable being Entrepreneur Relief.
In this article, we’ll explain how Entrepreneur Relief works, who qualifies, the limits involved, and some practical tips to help you make the most of it when it’s time to sell your business.
What is the Revised Entrepreneur Relief?
The Revised Entrepreneur Relief replaced an earlier version (for 2014–2015 ) and has applied from 1 January 2016 onwards.
It allows a lower CGT rate of 10% on gains arising from the disposal of qualifying business assets. This is significantly lower than the standard CGT rate of 33%.
However, there is a lifetime limit: up to €1 million for disposals made on or after 1 January 2016. This limit will increase to €1.5 million for disposals from 1 January 2026.
While it doesn’t remove CGT entirely, it can significantly reduce your tax liability in many cases.
Who Qualifies for Entrepreneur Relief?
To benefit from Entrepreneur Relief, several conditions must be satisfied.
Qualifying business
A “qualifying business” is generally a trade (i.e., active business ), not just passive investments. Certain activities are explicitly excluded, such as:
Holding shares, securities, or assets purely as investments
Holding development land
Development or letting of property
Suppose your business is structured as a company. In that case, additional rules apply: you must own at least 5% of the ordinary shares in the company (or in a holding company of a qualifying group ).
Also, within a group of companies, dormant companies or non-trading subsidiaries may interrupt qualification.
Qualifying business assets
These are the assets whose gains may qualify for the reduced CGT rate, provided other criteria are met. Examples include:
Shares held by an individual in a trading company (meeting the qualifying business test )
Assets used in a sole trader’s trade
Certain assets are excluded, including development land, shares where you remain “connected” to the company after disposal, and assets held purely as investments (not used in trade ), among others. Goodwill is also excluded if it is sold to a connected company.
Period of ownership/service
To prevent abuse, there are minimum period requirements:
The business assets must have been owned for a continuous period of 3 yearswithin the 5 years immediately before disposal.
In the case of shares, the 3-year period can be any time before disposal (i.e., not necessarily immediately preceding ).
If the business is conducted through a company, the person disposing must have helda managerial or technical position for at least three years, devoting at least 50% of their time to the company (or group ) in that capacity.
These rules ensure the relief is reserved for genuine business participants, not passive shareholders.
