Revised Entrepreneur Relief: the 10% rate on an Irish business exit

A 10% rate on the way out, if you meet the conditions

Revised Entrepreneur Relief lets an individual pay Capital Gains Tax at 10% rather than 33% when they sell a qualifying Irish business, up to a lifetime cap that rose to €1.5 million from 1 January 2026. It is the single most valuable relief on an Irish founder's exit, and it is the reason the tax on selling a trading company can be a fraction of the tax on selling an investment portfolio of the same value. The relief sits in section 597AA of the Taxes Consolidation Act 1997, it applies to individuals only, and it rewards the person who built and worked in the business rather than the person who merely held shares in it.

It is worth being clear at the outset what this relief is not, because the Irish corporate-structuring questions are covered elsewhere and are a different subject. This is not the corporate Substantial Shareholding Exemption or the holding-company comparison examined in the Irish holdco versus UK holdco analysis, which operate at company level. It is not about building or diluting founder equity, which is the subject of managing dilution and the cap table. It is the personal Capital Gains Tax an individual founder pays on the day they sell their shares, and how a relief can cut that charge from a third to a tenth of the gain.

What the relief actually does: 10% instead of 33%

The relief reduces the Capital Gains Tax rate on a qualifying disposal to 10%, against Ireland's standard 33% rate, on gains up to the lifetime limit. On a €1 million qualifying gain the difference is stark: €100,000 of tax under the relief against €330,000 at the standard rate, a saving of €230,000. The 10% rate has applied to qualifying disposals since 1 January 2017, when Finance Act 2016 reduced it from the original 20%, and it has been the headline number for an Irish trading exit ever since.

The relief is capped by a lifetime limit on the gains that can benefit, not an annual one. Every qualifying disposal a person makes counts against the same running total across their lifetime, so the relief is a finite allowance to be used deliberately rather than a rate that applies without limit. Gains above the lifetime cap fall back to the 33% standard rate. The cap is the variable that changed for 2026, and it is the part most founders need to get right, so it has its own section below.

The conditions: ownership, shareholding and working time

The relief is available only where the individual has genuinely owned and worked in a qualifying business, and the conditions are cumulative rather than alternative. The individual must have owned the qualifying business assets for a continuous period of three years in the five years immediately before the disposal. That ownership period is the baseline test, and it applies whether the assets are the assets of an unincorporated business or shares in a company.

Where the disposal is of shares, two further conditions bite, and they are the ones most often failed. The individual must hold at least 5% of the ordinary share capital of the company, and they must be a director or employee of the company who spends at least 50% of their time working for it in a managerial or technical capacity, again for a continuous three years in the five before the sale. The relief is therefore aimed at the working owner. A passive minority shareholder who never worked in the business, or a founder who stepped back years before the sale and no longer met the time test, can find the relief is not available on the shares they thought would qualify. The conditions have to be true on the facts across the qualifying period, not merely at the moment of sale.

What does not qualify

Passive and investment activity is excluded, because a qualifying business is defined as a business other than the holding of investments. Section 597AA defines a qualifying business as one that is not the holding of securities or other assets as investments, not the holding of development land, and not the development or letting of land. The effect is that the relief is for trading, and the assets of a trade, and not for wealth held in a corporate wrapper.

Several common structures fall outside it as a result. An investment company holding a share or property portfolio is not a qualifying business. A company whose activity is letting land or property does not qualify on that activity. Development land is excluded in its own right. A dormant company, or the passive-investment part of an otherwise trading group, does not carry the relief. Chargeable business assets also do not include assets on the disposal of which no chargeable gain would arise, and the relief attaches to the business assets rather than to cash or investments the company has accumulated. The practical consequence is that a company which has built up a large cash or investment balance alongside its trade may find that part of its value does not attract the 10% rate, which is one reason the extraction and structuring decisions in the rest of this cluster matter before a sale.

The €1.5m limit and the pre-2026 aggregation trap

The lifetime limit rose from €1 million to €1.5 million for disposals made on or after 1 January 2026, but the extra €500,000 is only available on gains realised from that date. Finance Act 2025 increased the ceiling as part of Budget 2026, and the increase is genuinely useful for a founder whose gain exceeds the old €1 million. The trap is in how prior disposals are counted. Disposals made between 1 January 2016 and 31 December 2025 are aggregated against the old €1 million limit, so a founder who has already used relief on earlier disposals does not get a fresh €1.5 million; they get the increased ceiling reduced by what they have already claimed against the €1 million.

The timing point follows directly. For a founder approaching an exit around the turn of 2026, whether a disposal completes in 2025 or in 2026 can change the amount of gain that qualifies for the 10% rate, because only disposals on or after 1 January 2026 access the higher ceiling. This is a planning question to settle before signing, not after, and it interacts with the disposal-date rules that decide which tax year a sale falls into. The relief rewards the founder who models the limit and the timing in advance; it penalises the one who discovers the aggregation rule when the return is prepared.

Where it sits against the other exit routes

Revised Entrepreneur Relief is the third-party-sale route, and it is one of several ways an Irish owner can take value out of a business, each with its own relief and its own conditions. Selling the business to an outside buyer is what this relief is built for. Passing the business to the next generation is a different route with a different relief, examined in Retirement Relief and the €10 million cap, where the question is succession rather than sale. Extracting accumulated company cash before any exit, through a pension, is a separate lever addressed in the 100% employer PRSA cap. And where the people running the business are inbound executives rather than founder-owners, the relevant relief is the one for relocation, set out in SARP and the €125,000 threshold.

The reason to see them together is that a well-planned exit often uses more than one. A founder may extract surplus cash efficiently before a sale so that the business sold is a clean trading company that qualifies cleanly for the 10% rate, and may choose between selling to a third party and passing to family depending on which relief and which cap serve the family better. The reliefs are not alternatives to be picked in isolation; they are a sequence to be planned as one exit.

Ireland's 10% against the UK's rising rate

For a founder with a choice of where to be tax resident when they sell, Ireland's 10% rate now compares favourably with the United Kingdom's equivalent relief, which is moving the other way. The UK's Business Asset Disposal Relief, the successor to Entrepreneurs' Relief, has risen from 10% to 14% and increases again to 18% for disposals on or after 6 April 2026, on a lifetime limit of £1 million. Ireland's relief moved in the opposite direction, holding the 10% rate and raising the lifetime cap to €1.5 million. The table sets the two side by side at a high level.

The comparison is not an invitation to move country for a rate. It is a reminder that the rate a founder pays on a sale depends on where they are tax resident at the date of disposal, and residence is decided by each country's own rules rather than by preference. The UK relief and the anti-forestalling rules that surround the 2026 rate change are covered in the analysis of UK Business Asset Disposal Relief at 18%, and the UK residence question that underlies any such choice is the subject of the Statutory Residence Test. The point for the Irish relief is narrower: a founder planning a cross-border exit should fix the residence question before the sale, because it cannot be fixed afterwards.

What a founder should get right before a sale

The relief rewards preparation, so the work belongs in the years before the exit, not the weeks. The three conditions, ownership, shareholding and working time, all run over a three-year period measured back from the disposal, which means a founder who wants the relief on a future sale should be able to show, on the facts, that the tests were met throughout. A founder who reduced their shareholding below 5%, or stepped back from a working role, or let the business drift toward passive investment activity, may have quietly lost the relief long before the buyer appeared.

The practical checklist before a sale is short and consequential: confirm the three-year ownership, shareholding and working-time tests are satisfied on the facts; confirm the business is a qualifying trading business and identify any excluded investment or property-letting activity that will not attract the 10% rate; model the lifetime limit against any prior disposals and the timing against the 2026 increase; and, where a move of country is in contemplation, settle the residence position before signing. Done in that order, the relief delivers a 10% exit on a €1.5 million gain. Left to the deal, it becomes a set of conditions the founder can no longer change.

Frequently asked questions

What is Revised Entrepreneur Relief in Ireland?

It is a Capital Gains Tax relief in section 597AA of the Taxes Consolidation Act 1997 that charges 10% instead of the 33% standard rate on qualifying business-asset disposals by an individual, up to a lifetime limit. It is aimed at the working owner of a trading business, rewarding someone who has owned and worked in the business rather than a passive investor. It applies to individuals only, not to companies, and it is the relief that most often decides the tax on an Irish founder's exit.

How much is the lifetime limit for 2026?

The lifetime limit is €1.5 million for disposals made on or after 1 January 2026, up from €1 million previously. The increase came through Finance Act 2025 as part of Budget 2026. Disposals made between 1 January 2016 and 31 December 2025 are aggregated against the old €1 million ceiling, so the additional €500,000 of relief is only available on gains realised from 2026 onwards, not retrospectively on gains already relieved against the earlier limit.

What are the conditions to qualify?

The individual must have owned the qualifying business assets for a continuous three years in the five years before the disposal. Where the disposal is of shares, they must also hold at least 5% of the ordinary share capital and be a director or employee spending at least 50% of their working time in the company in a managerial or technical capacity, for a continuous three of the five years before the sale. The conditions are cumulative and must be satisfied on the facts across the qualifying period.

What is the difference between the 10% rate and the standard rate?

The standard rate of Irish Capital Gains Tax is 33%. Revised Entrepreneur Relief reduces the rate to 10% on the qualifying gain up to the lifetime limit. On a €1 million qualifying gain that is €100,000 of tax rather than €330,000, a saving of €230,000. Gains above the lifetime limit are taxed at the 33% standard rate, so the relief is a finite lifetime allowance rather than a rate that applies without limit.

Does an investment or property company qualify?

No. A qualifying business is defined to exclude the holding of securities or other assets as investments, the holding of development land, and the development or letting of land. An investment company holding a share or property portfolio, a property-letting vehicle, and a dormant company do not qualify. The relief is for trading businesses and their working owners, so a company that has drifted into passive investment activity, or accumulated large investment balances alongside its trade, may find that part of its value does not attract the 10% rate.

How does it compare with UK Business Asset Disposal Relief?

Ireland holds a 10% rate on a lifetime limit rising to €1.5 million from 2026. The UK's Business Asset Disposal Relief is moving the other way: from 10% to 14% and then to 18% for disposals on or after 6 April 2026, on a £1 million lifetime limit. For a founder with a choice, the Irish relief now compares favourably, but the rate a person actually pays depends on where they are tax resident at the date of sale, which is decided by each country's residence rules and must be settled before the deal completes.

When should a founder plan for the relief?

Years before the sale, because all three conditions run over a three-year period measured back from the disposal. A founder who wants the 10% rate on a future exit should be able to show the ownership, shareholding and working-time tests were met throughout, keep the business a qualifying trading business, and manage any excluded investment activity. Planning in the weeks before a sale is usually too late to fix a condition that had to be true for three years.

Does the relief apply automatically?

No. The 10% rate has to be claimed on the Capital Gains Tax return for the year of disposal, and the claim rests on the conditions being satisfied on the facts. A founder who assumes the relief is automatic, or who has not documented the ownership, shareholding and working-time position, is exposed if the claim is examined. The relief is generous, but it is conditional, and the conditions have to be evidenced rather than asserted.

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Revised Entrepreneur Relief turns a 33% exit into a 10% one, on up to €1.5 million of gain from 2026, for the founder who built and worked in a genuine trading business. It rewards the working owner and withholds itself from passive wealth, and it is earned over the three years before a sale, not claimed in the weeks after a buyer appears. The relief is not a rate that applies because a company was sold. It is a rate that applies because the conditions were met.

Critical advisory. The jurisdictional frameworks set out above carry strict liability and retroactive tax exposure. Executing these structures through standard formation agents, without institutional-grade tax architecture, is a primary trigger for HMRC and Revenue audits. To mitigate systemic risk and discuss bespoke structuring, initiate a confidential briefing with our Managing Partners.