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Ireland to slash capital gains tax for start-ups to 10pc with €10m cap - from TheJournal.ie, John Kennedy

The Irish Government is planning to cut the rate of Capital Gains Tax for new start-ups to 10pc with a €10m cap on gains from next year, bringing Ireland in line with the tax environment for start-ups in the UK.

The Department of Finance’s Tax Strategy Group has produced a number of papers, including recommendations for the reform of the Capital Gains Tax structure.

The current capital gains tax (CGT) is 33pc and a provision to reduce CGT to 20pc with a €1m limit on gains before tax was slammed as derisory and not good enough by leading figures in Ireland’s start-up ecosystem, including the chair of the Irish Venture Capital Association Brian Caulfield.

The outdated CGT was seen as an impediment to start-ups awarding share options to employees and diminished any gain entrepreneurs could enjoy from an exit such as a trade sale..

.....The strategy group pointed to the document A Programme for a Partnership Government published in May 2016 which contains the following: “We will reduce the rate of Capital Gains Tax for new start-ups to 10pc from 2017 (held for five years and subject to a €10m cap on gains).”

However, there is a caveat. Start-ups formed after the date of commencement of the new relief will benefit.

The strategy group said: “This proposed measure would be similar in structure to the recently introduced entrepreneur relief but considerably more favourable and with the main difference being that it will be available only to those who commence a business from the date the new relief is introduced and not to those entrepreneurs who will have founded their business before that date.”

 

Full article available at The Journal.ie