Finance (No. 2) Act 2013

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Entrepreneur relief

45. (1) The Principal Act is amended by inserting the following section after section 597:

“Entrepreneur relief

597A. (1) In this section—

‘chargeable business asset’ means an asset, including goodwill but not including shares (other than shares mentioned in paragraph (b)), securities or other assets held as investments, acquired at a cost of not less than €10,000 on or after 1 January 2014 but on or before 31 December 2018 and which—

(a) is, or is an interest in, an asset used wholly for the purposes of a new business carried on by an individual, or

(b) is a holding of new ordinary shares, issued on or after 1 January 2014, in a qualifying company, of which the individual has control (within the meaning of section 10) and in which the individual is a full-time working director, carrying on new business,

other than an asset on the disposal of which no gain accruing would be a chargeable gain;

‘full-time working director’, in relation to a qualifying company, means a director required to devote substantially the whole of his or her time to the service of the company in a managerial or technical capacity;

‘new business’ means relevant trading activities carried on by an individual or by a qualifying company that were not previously carried on by that individual or qualifying company or by any person connected (within the meaning of section 10) with that individual or qualifying company;

‘qualifying company’ means a company which is a micro, small or medium-sized enterprise, as defined in Article 2 of the Annex to the Commission Recommendation of 6 May 2003¹ ;

‘relevant trading activities’ has the same meaning as in section 488 and includes farming (within the meaning of section 655).

(2) An individual who, on or after 1 January 2010, has made a disposal of an asset on which capital gains tax has been paid and who, on or after 1 January 2014 but on or before 31 December 2018, applies an amount equal to all or part of the consideration (after deducting any capital gains tax paid), in acquiring chargeable business assets, shall be entitled to a tax credit against any capital gains tax liability arising on a subsequent disposal of or of an interest in those chargeable business assets made more than 3 years after they were acquired, in an amount equal to the lower of—

(a) that part of the capital gains tax paid on the disposal of the asset in the proportion that the amount so applied bears to the consideration (after deducting any capital gains tax paid), and

(b) 50 per cent of the capital gains tax payable on the disposal of the chargeable business asset.

(3) Where on a subsequent disposal of the chargeable business assets referred to in subsection (2) an amount equal to all or part of the consideration (after deducting any capital gains tax paid) on that disposal is, in turn, applied on or after 1 January 2014 but on or before 31 December 2018, in acquiring other chargeable business assets (in this subsection referred to as ‘the new chargeable business assets’) used wholly in a further new business, the individual shall similarly be entitled to a tax credit against any capital gains tax liability arising on a subsequent disposal of or of an interest in those new chargeable business assets made more than 3 years after they were acquired, in an amount equal to the lower of—

(a) that part of the capital gains tax paid on the disposal of the chargeable business assets in the proportion that the amount so applied bears to the consideration (after deducting any capital gains tax paid), and

(b) 50 per cent of the capital gains tax payable on the disposal of the new chargeable business asset.”.

(2) This section shall come into operation on such day as the Minister for Finance may by order appoint.

¹ OJ No. L124, 20.5.2003, p.36