What is Entrepreneur Relief in Ireland and how does it work?
Entrepreneur Relief in Ireland cuts the Capital Gains Tax (CGT) rate on qualifying business gains from the standard 33% down to 10%. It is not a refund that lands in your account after the sale. It is a reduced rate applied to the gain when you calculate and pay the tax, which means the planning has to happen before the deal closes, not after.
Two very different reliefs get confused here, so let's separate them straight away. Revised Entrepreneur Relief is a CGT relief for people selling a business, company shares or business assets. Start-Up Relief for Entrepreneurs (SURE) is an income tax relief for people leaving a job to set up a new company, and it can refund PAYE (Pay As You Earn) income tax you have already paid. Same audience, completely different mechanics. We cover both below.
For qualifying disposals made on or after 1 January 2026, the 10% rate applies to the first €1.5 million of lifetime qualifying gains. That is an increase on the €1 million lifetime limit that applied to disposals from 1 January 2016 to 31 December 2025, confirmed by Revenue's guidance on Revised Entrepreneur Relief.
| Feature | Position for disposals from 1 January 2026 |
|---|---|
| CGT rate on qualifying gains | 10% |
| Standard CGT rate | 33% |
| Lifetime limit | €1,500,000 of qualifying gains |
| Previous lifetime limit | €1,000,000 (disposals 1 Jan 2016 to 31 Dec 2025) |
| Gains above the remaining limit | Taxed at the standard rate |
| Annual CGT exemption | €1,270 per person |
The limit is cumulative, not per sale. Every previous claim eats into it, so if you used €600,000 of the old €1 million limit on a 2021 disposal, you have €900,000 of the higher limit left for a 2026 sale. Anything above the remaining balance is generally taxed at 33%.
CGT arises when you dispose of an asset for more than it cost you: selling a trade, selling shares in your company, or selling premises and goodwill used in the business. Gifts and transfers to family members count as disposals too, at market value. If you want the underlying mechanics before you look at reliefs, our team can walk you through Capital Gains Tax in Ireland and how the computation is built.
Who qualifies for Entrepreneur Relief in 2026?
There are three tests in practice: what you sold, how long you held it, and what you actually did in the business. Miss any one of them and the relief is gone, no matter how deserving the sale feels.
If you are a sole trader or a partner disposing of all or part of a qualifying trade, the relief applies to the assets used in that trade, and you must have owned those assets for a continuous period of three years in the five years immediately before the disposal. A shareholder faces two extra hurdles. You must generally own at least 5% of the company's ordinary shares for a continuous period of at least three years during the five years before the disposal, and you must have been a director or employee spending at least 50% of your working time providing services to the company in a managerial or technical capacity for that same three-year period, as set out by Revenue.
| Test | What it requires | Who it applies to |
|---|---|---|
| Ownership | At least 5% of ordinary share capital | Shareholders in a trading or holding company |
| Holding period | Continuous 3 years within the 5 years before disposal | All claimants |
| Working time | At least 50% of working time in a managerial or technical capacity | Director or employee shareholders |
| Asset use | Assets used for the purposes of the trade | Sole traders and partners |
Newer businesses are where people get caught. A company trading for two and a half years cannot satisfy a three-year test, so an offer that lands early can be worth hundreds of thousands less than the same offer six months later. Liquidations, share reorganisations, a move from full-time to part-time, or a period where you stepped back from the managerial side can all break the continuous three-year run. Special timing rules apply in some of these cases, which is exactly why the three-year test should be checked before you sign heads of terms rather than after.
One point that reassures a lot of people: you do not have to be the original founder. Someone who bought into a business, built up their stake and ran it for years can claim, provided they personally meet every ownership, role and holding-period condition. The relief follows the individual, not the founding story. If you are still weighing up structure at the start of that journey, the differences between operating as a sole trader or a limited company will shape what a future claim looks like.
Which business assets and company shares qualify, and what is excluded?
Qualifying business assets fall into three broad groups: assets used for a trade carried on by a sole trader or partnership, shares in a qualifying trading company, and shares in a qualifying holding company whose group meets the trading conditions. The common thread is active trading. Passive value sitting inside a company does not attract the 10% rate.
The share sale versus asset sale distinction matters more than almost anything else in a deal. As an individual shareholder, you claim on the disposal of your qualifying shares. If instead the company sells its assets, the gain belongs to the company, the company pays the tax, and no qualifying personal gain automatically arises for you. Getting the cash out afterwards is a separate exercise with its own tax cost. Buyers often prefer an asset purchase and sellers often prefer a share sale, so this is a negotiating point with a real number attached.
- Assets used in a sole trade or partnership trade, including premises and goodwill
- Ordinary shares in a trading company where the 5%, three-year and working-time tests are met
- Shares in a holding company where the group as a whole carries on qualifying trading activities
Holding companies and groups are assessed on what the group actually does. The subsidiaries and the group's activities need to meet the qualifying trading requirements, and where a group carries significant non-trading assets or activities, the relief can be restricted or refused. A trading group with a sizeable investment property portfolio parked in a subsidiary is a classic problem case, and it is fixable only with a good run of time before a sale. Anyone running a limited company structure with more than one entity should have this reviewed early.
Revenue is explicit about what is excluded. Assets held as investments, development land, and goodwill disposed of to a connected company do not qualify under the Revised Entrepreneur Relief rules. In practice that rules out businesses consisting mainly of holding investments, dealing in or developing land, and holding securities or other investment assets. Property investment companies and share portfolio companies are outside the relief by design.
Anti-avoidance is the other thing to watch. Selling goodwill into a company you control, connected-party arrangements, personally owned premises let to your own company, and restructuring done mainly to manufacture a qualifying disposal all attract attention. The relief rewards genuine trading ownership. Arrangements built backwards from the tax answer tend not to survive review.
How do I calculate Entrepreneur Relief and the CGT due on a business sale?
The relief applies to the chargeable gain, not to the gross sale price. Work through the computation in order, then apply the rate.
- Start with the sale proceeds
- Deduct the allowable acquisition cost and any enhancement expenditure
- Deduct incidental costs of purchase and disposal, such as legal and professional fees
- Apply any available capital losses, current year first, then losses forward
- Deduct the annual exemption of €1,270 if it has not been used elsewhere
- Apply 10% to the qualifying gain within your remaining lifetime limit, and 33% to the balance
Here is how that lands for a 2026 disposal producing a €2 million qualifying chargeable gain, with no previous Entrepreneur Relief claims.
| Slice of gain | Rate | CGT |
|---|---|---|
| First €1,500,000 (lifetime limit) | 10% | €150,000 |
| Remaining €500,000 | 33% | €165,000 |
| Total CGT with the relief | €315,000 | |
| Same gain with no relief | 33% | €660,000 |
| Illustrative saving | €345,000 |
That €345,000 gap is the reason the three-year tests are worth planning around. Treat the figures as illustrative: earlier claims against the lifetime limit, capital losses, the precise base cost and the treatment of any non-trading element will all move the answer. And note what the relief does not do. It does not remove CGT above the remaining limit, and it does not apply to the headline sale price, so a €2 million sale of a business you built from nothing produces a very different result from a €2 million sale of a business you bought for €1.4 million.
How and when do I claim Entrepreneur Relief from Revenue?
The relief is not applied automatically. You claim it in the CGT section of your annual tax return, normally Form 11 for self-assessed taxpayers, or Form CG1 where you are not a chargeable person for income tax. Filing and paying are two separate obligations with two different deadlines, and that trips people up every year.
| Date of disposal | CGT payment due | Return due |
|---|---|---|
| 1 January to 30 November 2026 | 15 December 2026 | 31 October 2027 |
| 1 December to 31 December 2026 | 31 January 2027 | 31 October 2027 |
So the tax is generally paid long before the return that claims the relief is filed, per Revenue's CGT pay and file rules. You pay through Revenue Online Service (ROS). Getting the December split wrong is an easy way to pick up interest on an otherwise clean transaction. Our tax return service can handle the filing alongside the CGT computation.
Keep the evidence. If Revenue queries a claim two years after the money has been spent, reconstructing it from memory is miserable.
- Share registers, share certificates and B5 filings showing your percentage holding over time
- Employment records, contracts, board minutes and payroll evidence of your role
- Practical proof of the working-time test, such as diaries, job descriptions and duties
- Company and group accounts showing trading activity and any non-trading assets
- Purchase records, enhancement costs, legal invoices and the sale agreement
- Details of every previous claim counted against the lifetime limit
Before you sign anything, a few planning moves are worth the time: review eligibility months ahead of the transaction, model the share sale and asset sale alternatives side by side, confirm the group's trading status, identify non-trading assets that could restrict the claim, and resist restructuring without tax advice first. Clean, current books make all of this faster, which is where a steady bookkeeping service quietly earns its keep.
What is SURE and can I reclaim PAYE paid before starting my company?
Start-Up Relief for Entrepreneurs is a separate income tax relief, and it works in the opposite direction to Entrepreneur Relief. Instead of reducing tax on the way out of a business, SURE refunds income tax you have already paid so you can put money into a new one. It has nothing to do with the 10% CGT rate.
SURE is aimed at people leaving employment or unemployment to set up and work full-time in a new company. Broadly, according to Revenue's SURE guidance, you need to have had mainly PAYE income in the relevant earlier years, invest cash in new shares in a new company carrying on a new qualifying trade, and take up full-time employment with that company as a director or employee.
| Revised Entrepreneur Relief | SURE | |
|---|---|---|
| Tax affected | Capital Gains Tax | Income tax paid under PAYE |
| When it applies | On selling a business or shares | On investing in a new company |
| Benefit | 10% rate instead of 33% | Refund of income tax from earlier years |
| Core condition | 5% holding, 3 years, 50% working time | Full-time role, new qualifying trade, shares retained |
The refund mechanism is the appealing part. Your qualifying investment is carried back against income tax paid in earlier tax years, and Revenue refunds the tax that was actually paid in those years, subject to the statutory investment limits. Two caveats worth stating plainly. The refund is limited by the tax you genuinely paid, so a modest PAYE history produces a modest refund. And Universal Social Charge (USC) and PRSI are not refunded through SURE, only income tax.
The share and investment rules are strict:
- You must subscribe cash for newly issued eligible shares, not buy existing shares from someone else
- You generally need at least 15% of the issued ordinary share capital for the required period
- The shares must be retained for the prescribed holding period, at least four years
- Annual and overall investment limits apply, so check the current caps before you transfer money
- Linked Employment Investment Incentive (EII) rules and the company qualification conditions must also be satisfied
Claiming runs in two stages. The company first establishes that it and its trade qualify, and only then does the individual submit the SURE claim and supporting information to Revenue. Expect to produce share subscription documents, proof that the cash was actually paid, your PAYE records for the carry-back years, company registration and trade details, and evidence of full-time employment. Revenue updates its forms and process periodically, so confirm the current requirements on the SURE page before filing. If you are at the planning stage, our start-up accounting support covers the company set-up side that SURE depends on.
Frequently asked questions
Can Entrepreneur Relief be combined with Retirement Relief?
They are separate reliefs with separate conditions, and in some situations one disposal can benefit from Retirement Relief while other gains fall under Entrepreneur Relief. The interaction depends on your age, the assets, the buyer and the amounts involved, so it needs to be modelled on your actual numbers. Revenue sets out the conditions for disposals of a business or farm.
Can I claim Entrepreneur Relief on a partial sale of my shares?
Yes, a partial disposal can qualify, provided you satisfied the 5% ownership, three-year holding and working-time conditions in the period before the sale. The gain on the shares you sell is what qualifies, and it counts against your lifetime limit.
Can shares in a holding company qualify for Entrepreneur Relief?
They can, where the group carries on qualifying trading activities. What matters is the substance of the group's activities rather than the label on the parent company, and significant non-trading assets or activities within the group can restrict the claim.
Can I claim the relief more than once before reaching the lifetime limit?
Yes. There is no cap on the number of qualifying disposals, only on the cumulative gains. Each claim reduces the balance available, so track your claims carefully:
- Record the qualifying gain claimed on every disposal
- Keep the returns and computations that supported each claim
- Check the running total before agreeing your next sale
What happens if my company owns investment property alongside its trade?
Investment assets do not qualify, and a material non-trading element can restrict or jeopardise the relief on a share sale. This is one of the most common problems we see, and it usually needs to be addressed well in advance rather than in the weeks before a completion.
What should I do before investing in or selling my business?
If SURE is on your radar, check eligibility before you subscribe for shares. The share issue, the payment trail, the employment arrangements and the company's activities all have to be right from day one, and a relief lost at set-up cannot be retrofitted later.
If a sale is coming, get the review done well ahead of the transaction, particularly where any of the following apply:
- There is a holding company or a group structure
- The company holds investment property, development land or surplus cash
- Connected-party restructuring is being considered
- A Retirement Relief claim may also be in play, including on a farm business
- Your role or shareholding has changed in the last five years
Coffey & Co can carry out an eligibility review against the ownership, working-time and holding-period tests, prepare a CGT estimate with and without the relief, and set out a Revenue filing plan with the right payment dates. Talk to our small business accountants in Limerick, or get in touch to arrange a tax consultation before you commit to an investment or a sale.
The information in this blog is provided for general informational purposes only and does not constitute accounting, tax, business, or legal advice. While Coffey & Co aims to ensure the content is accurate and up to date, no guarantee is given regarding its completeness or suitability for any particular purpose.