The Participation Exemption from Capital Gains Tax

The Participation Exemption is one of Ireland’s most potent tax provisions. Under it a gain by a parent company on the disposal of ordinary shares in a trading company or part of a trading group will be exempt from Capital Gains Tax provided that the trading company is resident in the EU or in a treaty country, the parent has held a minimum shareholding of 5% for a continuous period of 12 months and certain other conditions are met

Typical Problems that we come across

Sometimes Irish companies assume that the Exemption only applies to gains on the disposal of shares in foreign companies. In fact, it also applies to gains on the disposal of shares in Irish companies.

 

In other cases we find that management is unaware how to use the exemption to its best effect and as a result miss potentially highly profitable opportunities.

How We Can Help

Extracting full value from the Participation Exemption requires a level of strategic awareness and careful planning.

 

We work with management to make them aware of the potential value of the exemption, to alert them to the precise conditions that must be met to avail of it and how to plan a corporate strategy that takes full commercial advantage of it.