This relief has been extended for a further two years to 31st December 2026.
The bill provides for amendments to the EII scheme including an increase in the annual limit that an investor can claim relief on from €500,000 to €1,000,000. The bill also provides clarification that the rate of relief applicable for follow-on investments, within the seven or ten year eligibility period, is 35%.
A welcome extension to the deadline for processing the relief from four months post year end to 31 December in the year following the year in which the shares were issued was also provided for in the bill. The relief provided cannot exceed the maximum relief thresholds as provided for under the General Block Exemption Regulation (GBER).
This relief has also been extended for a further two years to 31st December 2026.
The bill provides for an increase in the maximum qualifying investment in respect of which an investor may claim relief on, over the seven-year period, to €140,000 per annum i.e. €980,000 in total. This was previously €100,000 per annum.
The rate of relief change from 20% to 35% for follow on investments also applies to SURE.
Finance Act (No. 2) 2023 introduced Angel investor CGT relief. The relief provides a reduced CGT rate for qualifying investments made by a qualifying investor in a qualifying company. The relief is intended to encourage qualifying investors to acquire significant minority shareholdings in innovative start up SME companies. The reduced CGT rate is 16% for direct investments or 18% for investments made by a partnership. Previously this relief was restricted to a lifetime limit of €3m on gains. Finance Bill 2024 proposes increasing the lifetime limit on gains from €3 million to €10 million.
The Bill also provides for a number of technical amendments. The bill is also subject to commencement by a Ministerial Order.
Retirement relief is a relief available of gains on the disposal of a business (including a farm) to a child or a third party where certain conditions are met.
With effect from 1 January 2025, the upper age limit for the relief will increase from 65 to 69 as introduced by Finance (No. 2) Act 2023. The Act introduced a new maximum limit of €10m on disposal of qualifying assets to children up to and including 69 years of age. Whilst this increased upper age limit will remain in place, Finance Bill 2024 provides that transfers of a qualifying assets in excess of €10m to a child by an individual aged between 55 and 69 will be subject to a Capital Gains Tax (CGT) clawback period of 12 years i.e. no CGT will be payable on such a disposal where the clawback is not triggered.
The bill outlines the detail of how this new clawback period will operate:
It is very important that this 12 year period is monitored and a tax return making the relevant claim for the abatement of the deferred tax is submitted for the relevant year by the child. If the claim is not made, the deferred CGT will become payable. This is a welcome provision and will facilitate the intra-generational transfer of businesses. Care will be needed however in monitoring the 12 year abatement period and ensuring a “claim” is validly made by the child at the end of the abatement period. This seems an overly complex and unnecessary provision.
There was no change to the rate of CAT, which is currently 33%. However, the tax-free thresholds for gifts/inheritances have increased as follows:
These changes came into effect from 2nd October 2024.
CAT agricultural relief on the gift or inheritance of agricultural property is only available provided that the beneficiary meets a number of conditions. These include the “active farmer” test which requires the beneficiary to farm the agricultural property or lease it to an individual who farms the agricultural property, for at least six years following the gift or inheritance. A modified version of this “active farmer” requirement is provided for in the Finance Bill. The requirement to farm the agricultural property is replaced with a requirement to use the agricultural property for the purposes of farming. The Bill provides that a beneficiary can satisfy this requirement by using part of the agricultural property for the purposes of farming themselves and leasing the remaining part of the agricultural property to a person who uses the agricultural property for the purposes of farming. The intention behind this revision is to facilitate more flexible use of the land and to ensure that the entirety of the agricultural property is used for the purposes of farming
The Finance Bill also extends the “active farmer” test to the disponer of the gift or inheritance. Therefore, for a six year period prior to the date of the gift or inheritance, the land must have been used for the purposes of farming by the disponer or a person to whom the property was leased. Transitional provisions apply. This includes being a qualifying farmer themselves or have leased to a qualifying farmer in that period.
Finance (No. 2) Act introduced specific reporting obligations in respect of loans from close relatives which are either interest free or are provided for below market rate interest. Where the following conditions are met, the reporting obligations apply:
The Finance Bill has removed the provision providing that the filing obligation will arise if no interest is paid on the loan within six months of the gift arising. The provisions comes into effect on 1 January 2025
Should you wish to discuss any aspect of Entrepreneurship/Private Business & Capital Taxes, please contact our team:
Laura Melia - Senior Tax Manager - +353 1 6440100
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