Entrepreneur Relief in Ireland
Summary
Entrepreneur Relief in Ireland reduces Capital Gains Tax from 33% to 10% on qualifying business disposals.
If you are an Irish business owner, company director, or shareholder planning to sell your business or exit from a company, Entrepreneur Relief could save you a fortune in tax. Instead of paying the standard 33% Capital Gains Tax (CGT), qualifying disposals are taxed at just 10%.
At Irish Tax Hub, we work with entrepreneurs, business owners, and investors across Ireland to ensure they maximise available reliefs while staying fully compliant with Revenue rules. We regularly see business owners save hundreds of thousands of euro simply by applying Entrepreneur Relief correctly.
This comprehensive guide covers everything you need to know about Entrepreneur Relief in Ireland:
- What Entrepreneur Relief is and why it exists
- How it reduces your CGT liability
- Who qualifies and what assets are covered
- Conditions for business owners and shareholders
- The lifetime limit and how it works in practice
- Examples showing the real tax savings
- Common pitfalls and how to avoid losing relief
- Interaction with other reliefs (like Retirement Relief)
- How Irish Tax Hub can help you claim Entrepreneur Relief correctly
What is Entrepreneur Relief in Ireland?
Entrepreneur Relief is a Capital Gains Tax relief introduced to encourage entrepreneurship and investment in Irish businesses.
- Standard CGT rate in Ireland = 33%
- Entrepreneur Relief CGT rate = 10%
- Lifetime limit = €1 million in chargeable gains
This means an Irish business owner who sells their qualifying business assets or shares can pay one-third of the usual tax.
👉 Example: If you sell your company for a gain of €1 million, your CGT liability could drop from €330,000 to €100,000 - a saving of €230,000.
Who Can Claim Entrepreneur Relief?
The relief is available to individuals (not companies) who dispose of:
- All or part of a business carried on by them as a sole trader or partner
- Shares in a trading company
- Shares in a holding company of a trading group
The key is that the assets or shares must be in a qualifying trade - not merely investments.
Qualifying Conditions
Entrepreneur Relief is subject to strict qualifying conditions. These must be satisfied at the time of disposal.
1. For Sole Traders and Partners
- The business assets must have been used for a trade carried on by the individual (not for passive investment).
- The assets must have been owned for at least 3 years prior to the disposal.
2. For Shareholders in a Company
To claim relief on the disposal of shares:
- You must have owned at least 5% of the ordinary shares in the company.
- The company must be a trading company or the holding company of a trading group.
- You must have been a director or employee of the company for at least 3 years in the 5 years before disposal.
- The company’s main activities must be trading - not passive property or investment holding.
3. Excluded Assets
Entrepreneur Relief does not apply to:
- Investment properties
- Land or development assets held for speculation
- Shares in companies whose main activity is holding investments
- Cash or passive investments within a company
The Lifetime Limit Explained
- The reduced 10% CGT rate applies to up to €1 million of gains over your lifetime.
- Gains above €1 million are taxed at the standard 33% rate.
- The €1m cap applies per individual, not per business disposal.
👉 This means that if you sell two businesses for €600k each, the first €1m will qualify for relief at 10%, but the excess €200k will be taxed at 33%.
Worked Examples
Example 1 – Business Sale
- Owner sells a business for a gain of €750,000.
- Without relief: CGT = €750,000 × 33% = €247,500.
- With Entrepreneur Relief: CGT = €750,000 × 10% = €75,000.
👉 Tax saved = €172,500.
Example 2 – Sale Above Lifetime Limit
- Owner sells company shares for a gain of €1.5 million.
- First €1 million = 10% CGT = €100,000.
- Remaining €500,000 = 33% CGT = €165,000.
- Total CGT = €265,000 instead of €495,000.
👉 Tax saved = €230,000.
Interaction with Retirement Relief
Many business owners over 55 may also qualify for Retirement Relief (which can exempt larger disposals to children or third parties).
- Retirement Relief can apply in addition to or instead of Entrepreneur Relief.
- The interaction between the two reliefs can be complex and depends on your age, the value of the business, and who you’re selling/transferring to.
👉 At Irish Tax Hub, we carefully assess which relief (or combination) will deliver the maximum tax savings for your situation.
Common Pitfalls That Cost Entrepreneurs Relief
We frequently see clients lose eligibility due to small but costly mistakes, such as:
- Falling below the 5% shareholding test (often after raising capital).
- Resigning as a director too early before disposal (must meet the 3 years in 5 rule).
- Holding shares in a non-trading company (e.g., property holding).
- Failing to meet the 3-year ownership requirement.
- Incorrectly assuming all assets in a business qualify (investment property and surplus cash don’t).
Once these mistakes are made, they often can’t be fixed retrospectively. Planning ahead is crucial.
How Irish Tax Hub Can Help You
At Irish Tax Hub, our dedicated CGT specialists ensure you maximise Entrepreneur Relief while staying Revenue-compliant. We provide:
- ✅ Eligibility reviews – checking your ownership, shareholding, and employment tests.
- ✅ CGT calculations – accurate tax computations to avoid Revenue challenges.
- ✅ Revenue filing – ensuring your CGT return is correct and submitted on time.
FAQs on Entrepreneur Relief
Q: Can companies claim Entrepreneur Relief?
No. The relief is for individuals only, not companies.
Q: Can I claim both Entrepreneur Relief and Retirement Relief?
Sometimes yes, but the interaction is complex. Professional advice is strongly recommended.
Q: Does rental income or investment activity qualify?
No. Only trading activities qualify. Passive income does not.
Q: Do I still have to file a CGT return if relief makes my liability small?
Yes. You must still file a return even if the relief reduces your tax liability.
Final Thoughts – Don’t Miss Out on Entrepreneur Relief
Entrepreneur Relief is one of the most powerful CGT reliefs in Ireland. It can reduce your tax bill from 33% to 10%, saving you hundreds of thousands of euro. But with strict conditions, many entrepreneurs miss out due to lack of planning or poor advice.
At Irish Tax Hub, we take the stress out of CGT planning and ensure you don’t leave money on the table. Whether you’re preparing for a sale, restructuring, or thinking about retirement, we can help you plan the most tax-efficient exit.
👉 Sign up for out CGT review service today. Irish Tax Hub - the trusted experts in Irish tax reliefs, CGT, and compliance.
This blog post is for informational purposes only and does not constitute tax, financial, or legal advice. Tax laws and regulations are subject to change and may vary based on individual circumstances. Readers are strongly encouraged to consult with a qualified tax professional or financial advisor before making decisions based on the information provided. We make no guarantee regarding the accuracy, completeness, or applicability of this content to your particular tax situation.
