Retirement Relief in Ireland

If you are a business owner, farmer, or shareholder in Ireland thinking about selling or transferring your business, you need to understand Retirement Relief. This valuable Capital Gains Tax (CGT) relief can eliminate or significantly reduce the tax you pay when disposing of certain business or farm assets.

At Irish Tax Hub, we specialise in helping business owners and families maximise reliefs like Retirement Relief, Entrepreneur Relief, and Principal Private Residence Relief. With careful planning, we ensure you keep more of your hard-earned wealth and transfer it tax-efficiently.

In this article, we’ll explain everything you need to know about Retirement Relief in Ireland:

• What Retirement Relief is and why it exists
• Who qualifies for Retirement Relief
• Conditions for transfers to children vs third parties
• Lifetime limits and value thresholds
• Retirement Relief for farmers and family businesses
• Worked examples of potential tax savings
• Common pitfalls and mistakes to avoid
• How Irish Tax Hub can help you plan your exit strategy

What is Retirement Relief in Ireland?

Retirement Relief is a generous Capital Gains Tax exemption available to individuals who dispose of certain business assets, farms, or shares in a family company.

Despite the name, you don’t actually have to retire or stop working to qualify. The term simply refers to relief available to older business owners (usually aged 55 or over).

Without relief, the disposal of a business, farm, or shares could trigger a 33% CGT liability on the gain. With Retirement Relief, the tax can be reduced or completely eliminated.

Who Can Claim Retirement Relief?

Retirement Relief is available to:

• Sole traders and partners disposing of all or part of their business.
• Farmers transferring or selling farmland.
• Company shareholders disposing of shares in a family trading company.
• Individuals aged 55 or older who have owned and used the assets for the required period.

Key Conditions for Retirement Relief

To qualify, the following conditions must be met:

• The individual must be aged 55 or over at the time of disposal.
• The assets must have been owned for at least 10 years (and used in the business).
• For shares in a family company you must have owned the shares for at least 10 years, you must have been a working director for at least 10 years, and a full-time working director for at least 5 of those years.
• The disposal must be of qualifying business or farm assets, not passive investments.

Transfers to Children vs Sales to Third Parties

The relief available depends on whether you transfer the assets to your children or sell to someone outside the family.

1. Disposal to a Child

• Full CGT exemption is available if you are aged 55–65.
• After age 66, restrictions apply:
• The maximum tax-free disposal to a child is capped at €3 million.
• A “child” for this purpose can include not only your son/daughter, but also certain relatives such as nieces, nephews, and foster children in qualifying circumstances.

2. Disposal to a Third Party

• If aged 55–65:
• Gains up to €750,000 are exempt from CGT.
• Gains above this are taxable at 33%.
• If aged 66 or over:
• The limit falls to €500,000.

Retirement Relief for Farmers

Retirement Relief is particularly important for Irish farmers passing land to children.

• Full relief is available if the farmer is aged 55–65.
• After age 66, the €3 million cap applies.
• The land must have been farmed for at least 10 years (or leased out under qualifying arrangements).

Worked Examples

Example 1 – Sale to Third Party at Age 60

• Business sold for €700,000.
• Owner is 60 years old.
• Full exemption applies (under €750,000).
  👉 No CGT payable.

Example 2 – Sale to Third Party at Age 67

• Business sold for €700,000.
• Owner is 67 years old.
• Exemption limit = €500,000.
• Excess = €200,000 taxed at 33% = €66,000 CGT payable.

Example 3 – Transfer of Farm to Child at Age 64

• Farmland transferred worth €2.5 million.
• Parent is 64 years old.
• Full exemption applies (under age 66, no cap).
  👉 No CGT payable.

Example 4 – Transfer of Farm to Child at Age 68

• Farmland worth €4 million.
• Parent is 68 years old.
• Cap of €3 million applies.
• Excess = €1 million taxed at 33% = €330,000 CGT payable.

Common Pitfalls and Mistakes

At Irish Tax Hub, we often see business owners miss out on relief due to:

• Delaying transfers past age 66, triggering stricter limits.
• Failing the 10-year ownership or working director rule.
• Misunderstanding what qualifies as a “child” under the relief.
• Confusing Retirement Relief with Entrepreneur Relief.
• Not considering Capital Acquisitions Tax (CAT) for the recipient in family transfers.

These mistakes can cost families tens or even hundreds of thousands in unnecessary tax.

How Irish Tax Hub Can Help

Planning for Retirement Relief in Ireland is complex and time-sensitive. At Irish Tax Hub, we make it simple. Our services include:

• ✅ Eligibility checks – confirming if you qualify and to what extent.
• ✅ CGT calculations – accurate computations for Revenue reporting.
• ✅ Professional filing – preparing and submitting your CGT return correctly.
• ✅ Revenue support – dealing with any queries after filing.

FAQs on Retirement Relief

Do I need to actually retire to qualify?
No - the name is misleading. You simply need to be aged 55 or over and meet the asset ownership conditions.

Can I claim both Retirement Relief and Entrepreneur Relief?
Yes, in certain cases - but the interaction is complex and requires professional advice.

Does rental property qualify?
No, investment properties are excluded. Relief is only for trading businesses, farms, or qualifying shares.

What if I gift assets to my children?
The relief applies, but you must also consider their Capital Acquisitions Tax (CAT) position.

Final Thoughts – Don’t Leave Retirement Relief to Chance

Retirement Relief in Ireland can eliminate huge Capital Gains Tax bills when selling or transferring your business or farm. But with strict conditions, ownership tests, and age-related limits, the difference between acting at 64 or 67 could be hundreds of thousands of euro.

At Irish Tax Hub, our expert tax advisors will:

• Assess your eligibility for Retirement Relief
• Advise on timing and structure to maximise savings
• Coordinate with other reliefs like Entrepreneur Relief and CAT
• Handle the paperwork so you don’t make costly mistakes

📞 Speak with us today and take the stress out of tax planning.

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