A new capital gains tax relief for entrepreneurs has been announced which will lower the rate of capital gains tax from the current rate of 33% to 20% in respect of certain business disposals by entrepreneurs. The revised CGT rate of 20% will apply to the first €1 million of chargeable gains arising on a disposal of the whole or part of a business. The balance of chargeable gains arising will remain liable to CGT at its current rate of 33%. This new rate will become effective from 1 January 2016.
The above change has come about amid considerable pressure from the business community in recent years to align Ireland’s competitiveness internationally and in particular with the UK. However, the above measure has a long way to go in terms of matching the UK’s favourable CGT regime which is in place for entrepreneurs who currently enjoy a lower CGT rate of 10% on the first Stg£10 million of chargeable gains.