Using an Irish personal holding company to grow and protect your wealth

While the general rate of capital gains tax ("CGT") in Ireland is 33%, a reduced rate of 10% applies to the sale of certain shares and business assets up to €1m.

Investors can leverage this lower rate of CGT to minimise tax arisng on seed capital investments and business owners can avail of this relief on sale or exit.

However, the €1m threshold is a life-time limit. The 10% rate therefore favours small business entrepreneurs and is of little benefit to shareholders and investors in medium and large businesses.

For many, the reduce rate of CGT will leave significant amounts chargeable at the high rate. With planning this exposure can be substantially reduced, deferred indefinitely or potentially avoided altogether.

Individuals with interests in more than one business are particularly disadvantaged.

Higher rate CGT can be deferred by structuring investment through an Irish Personal Holding Company (“"Irish personal holding company"”).

"Irish personal holding company"s enable individual or corporate investors to access tax-free returns on investments in trading entities.

"Irish personal holding company"s are exempt from companies CGT on disposals of shares in a qualifying subsidiary. The exemption also applies to gains arising on the disposal of assets related to shares, such as options and convertible securities