Capital Gains Tax in Ireland: A Plain English Guide for SME Owners

At 33%, Ireland’s Capital Gains Tax rate is one of the highest in the OECD. It applies to the profit made on disposing of a capital asset — selling property, shares, a business, or certain other assets. For a business owner who has spent decades building a company and is now looking to sell or pass it on, CGT can represent an enormous tax charge on what should be the financial reward for a lifetime of work.

It is also one of the most plannable taxes in the system. Unlike income tax, which arises year after year on income you earn regardless of your choices, CGT typically arises on discrete events — a disposal — that you generally choose when to trigger. That creates the opportunity to plan, to utilise reliefs, and to structure transactions in ways that significantly reduce the tax cost.

This article covers how CGT works, the most important reliefs available to Irish business owners, and the planning framework for minimising the tax.

The Basic Mechanics

Capital Gains Tax arises when you dispose of a chargeable asset at a gain. A disposal includes:

Selling an asset. Giving an asset away (except in certain circumstances). Receiving compensation for the destruction or loss of an asset. In some cases, transferring an asset to a connected person at below market value (Revenue can substitute market value).

The gain is calculated as:

Disposal proceeds minus allowable costs = chargeable gain

Allowable costs include the original purchase price of the asset, any incidental costs of acquisition (legal fees, stamp duty), enhancement expenditure that increased the value of the asset, and incidental costs of disposal (agent fees, legal costs on the sale).

Inflation adjustment (indexation relief) applied to assets held before 2003, but it was abolished for disposals after 1 January 2003. For assets purchased after that date, there is no inflation relief — the gain is calculated on the nominal figures regardless of how long the asset has been held.

The standard CGT rate is 33% on the chargeable gain. A lower rate of 10% applies to gains on entrepreneurial assets qualifying for Revised Entrepreneur Relief (discussed below).

There is an annual CGT exemption of €1,270 per person per year. The first €1,270 of chargeable gains in a tax year is free of CGT. This is a small exemption relative to the gains that typically arise on business assets, but it is worth utilising each year on smaller disposals.

Payment Dates

CGT is paid on a current-year basis, unlike income tax. If you make a capital gain between 1 January and 30 November, the CGT is due by 15 December of that same year. If you make a gain between 1 December and 31 December, the CGT is due by 31 January of the following year.

This means CGT can arise and become payable before you have even filed your annual income tax return. For a business disposal or property sale in, say, October 2026, the CGT on that gain is due by 15 December 2026 — with the full tax return due the following year.

The speed of the payment obligation catches people off guard. Our Irish tax calendar for 2026 sets out all the key payment dates, including CGT. Always factor the CGT payment timing into the cash flow planning around any significant disposal.

The Key Reliefs for Business Owners

Retirement Relief (Section 598 / 599)

This is the most valuable CGT relief available to Irish business owners, but it requires long-term planning to utilise fully.

Retirement Relief exempts — partially or fully — the CGT arising on the disposal of qualifying business assets, where the individual is aged 55 or over and has owned and been involved in the business for at least ten years.

For disposals to a child, the relief is very generous. Provided the child continues to operate the business for at least six years after the transfer, there is no upper limit on the value that can be transferred CGT-free. This makes Retirement Relief on family business transfers one of the most powerful wealth transfer mechanisms in the Irish tax code.

For disposals to a third party (a sale to an unconnected buyer), Retirement Relief provides full CGT exemption on the first €750,000 of qualifying consideration for individuals aged 55–65. For individuals aged 66 and over, the threshold is reduced to €500,000. Gains above the threshold are chargeable at the standard 33% rate.

The ten-year ownership and active involvement requirement must be met at the date of disposal. This means the planning for Retirement Relief needs to begin at least ten years before any anticipated exit — it cannot be retrofitted after a sale decision has been made.

Revised Entrepreneur Relief (Section 597AA)

For business owners who do not meet the Retirement Relief conditions — perhaps they are below 55, or the business has not been held long enough — the Revised Entrepreneur Relief provides a reduced CGT rate of 10% (rather than 33%) on qualifying gains from the disposal of qualifying business assets.

To qualify, the individual must own at least 5% of the ordinary share capital of the company and must have been a director or employee of the company for a continuous period of at least three years in the five years prior to disposal.

The relief is subject to a lifetime limit of €10 million in qualifying gains — meaning the 10% rate applies to the first €10 million of lifetime qualifying gains, with gains above this chargeable at the standard rate.

The difference between 33% CGT and 10% CGT on a €1 million gain is €230,000. The relief is substantial and well worth structuring your business affairs to qualify for.

Principal Private Residence Relief (PPR)

If you sell your principal private residence — the home you actually live in — the gain on that sale is fully exempt from CGT. The property must have been your only or main residence throughout the period of ownership.

This relief is straightforward for the family home, but becomes more complex when part of the property has been used for business (see home office above) or when the property has been rented out for part of the ownership period.

The Planning Framework

For a business owner who anticipates a future sale or business transfer in the next five to ten years, the CGT planning should be happening now:

Qualify for the right relief. Identify whether Retirement Relief or Revised Entrepreneur Relief is the target, and ensure you are meeting the qualifying conditions — particularly the ownership and involvement periods for Retirement Relief.

Consider the timing of the disposal. Spreading gains across tax years can utilise the annual exemption and potentially manage the rate band if gains are being recognised in lower-income years.

Consider the structure of the consideration. In some cases, deferred consideration, earn-outs, or vendor financing can spread the gain across more than one tax year. These arrangements have their own tax complexities and must be structured carefully.

Consider a family transfer before a third-party sale. If the business is ultimately going to the next generation, a transfer at an early stage — potentially CGT-free under Retirement Relief — followed by growth in the child’s hands may be more efficient than selling to a third party and paying 33% on the full gain. Be aware that any family transfer also triggers Capital Acquisitions Tax (CAT) considerations, so both taxes must be planned for simultaneously.

Plan around the annual exemption. The €1,270 annual CGT exemption is small, but if you are regularly making smaller capital disposals — shares, land, equipment — using the exemption each year rather than ignoring it adds up.

CGT is plannable. The businesses and families that pay the least are the ones that started thinking about it early. If you are building a business with a view to eventually selling or handing it on, the CGT conversation should be happening now, not when the sale offer is on the table. For more on CGT and other tax planning topics, explore our taxation guides.