CGT-Entrepreneur reliefs

  • Capital Gains Tax (CGT) Relief for Restructuring of Farmland

    • Introduced by Section 48 FA 2013

    • Allows farmers to restructure land without CGT liability, certified by Teagasc

    • Applicable for transactions from 1 Jan 2013 to 31 Dec 2025 (extended from previous deadline)

    • Must sell, purchase, or exchange land within two years of initial transaction

    • Applies only to agricultural land; buildings excluded

    • Full CGT Relief:

    • If new land's consideration is >= original's sales proceeds

    • Partial Relief:

    • Consideration < original's sales proceeds

    • Relief based on proportion: racextNewLandConsiderationextOriginalConsiderationrac{ ext{New Land Consideration} }{ ext{Original Consideration} }

    • New land must be held for 5 years to avoid clawback

    • Information Requirements:

    • Post-relief, individuals must report potential CGT to Revenue for compliance with State Aid requirements

    • Reporting timeframe amended to include when the entitlement to relief arises

  • Revised Entrepreneur Relief (FA 2016)

    • Reduced CGT rate of 10% (from 20%) for chargeable gains

    • Applicable for disposals after 1 Jan 2017, lifetime limit of €1m

    • Assets must be owned for a minimum of 3 years before disposal

    • Not applicable for:

    • Disposals by companies

    • Development land or businesses dealing/developing land

    • Individuals need to own at least 5% of shares, continuous for 3 years to qualify

  • Example of Entrepreneur Relief:

    • Individual sells business assets for €750,000, gain of €300,000, eligible for 10% CGT

    • If sold for €1,100,000: first €1,000,000 at 10%, remaining €100,000 at 33%

  • Reconstructions and Amalgamations

    • Common, involving mergers or hiving off of business segments

    • Types include:

    • Share for Share Exchange:

      • Target company’s shareholders exchange shares for new shares in the acquiring company

      • Treated as a tax-free exchange under certain conditions

  • Important Legislative Sections:

    • Section 604B TCA97

    • Sections amended by Finance Acts 2016, 2017, and 2023 regarding entrepreneur and farmland reliefs.