| 15.8°C Dublin

Small business owners look for Budget tax relief on profitable sale of assets

Capital gains tax should be cut from the current ‘penal’ rate, urges Small Firms Association director

Close

Sven Spollen-Behrens, Director of the Small Firms Association (SFA). Photo: Maxwells Dublin

Sven Spollen-Behrens, Director of the Small Firms Association (SFA). Photo: Maxwells Dublin

Sven Spollen-Behrens, Director of the Small Firms Association (SFA). Photo: Maxwells Dublin

The Small Firms Association (SFA) is asking for big cuts to capital gains taxes for business owners and much more generous reliefs for entrepreneurs who sell their businesses.

As part of its submission to the Department of Finance ahead of Budget 2022, the SFA is seeking tax breaks it says will stimulate investment in small businesses and help the Irish economy recover from the pandemic.

“Given the all-consuming nature of Covid-19, Ireland’s economy can no longer accommodate the long-standing barriers facing business owners,” said SFA director Sven Spollen-Behrens.

“Budget 2022 must take decisive action to stop the discrimination in the tax system against the self-employed and proprietary directors. To assist the recovery and make Ireland a better country for entrepreneurship, capital gains tax should be reduced from the current penal rate of 33pc to 20pc and increase the lifetime limit for CGT Entrepreneur Relief to €15m.”

Entrepreneur relief currently gives a discounted 10pc CGT rate on the sale of qualifying assets with a lifetime limit of €1m, so the SFA’s proposed change would be a radical departure from the status quo.

However, many business lobbies have been seeking changes to CGT and other taxes that affect business owners, arguing that the rates are uncompetitive compared to the UK and inhibit start-ups and business expansion.

The Family Business Network made similar proposals for reducing CGT and capital acquisitions tax to make it easier for families to transfer businesses to the next generation.

There was intense lobbying before last year’s budget to relax the CGT regime to stimulate economic activity. Various interest groups argued for a reduction in the rate from 33pc or for an expansion of exemptions and reliefs to help business owners sell assets without incurring big tax bills.

But the prospect of easing CGT was shot down on Budget Day as ministers instead closed a loophole and flagged abuses of the existing regime.

Finance Minister Paschal Donohoe did relax the shareholding requirement under Entrepreneur Relief to encourage owners to expand their businesses with outside investment.

But he followed up that amendment with a promise to crack down on CGT tax avoidance after officials found businesses were exploiting a foreign currency loophole.

Business Newsletter

Read the leading stories from the world of business.

This field is required



Most Watched





Privacy