Dáil Éireann Debate, Tuesday - 1 April 2025
340. Deputy John Clendennen asked the Minister for Finance his views on the operation of retirement relief, an agri-taxation measure, to promote the transfer of agri-business and farms to the next generation; and if he will make a statement on the matter. [15798/25]
Amharc ar fhreagraRelief from Capital Gains Tax (´CGT´) is available under sections 598 and 599 of the Taxes Consolidation Act 1997 (´TCA 1997´) to individuals aged 55 years or more on the disposal of qualifying business assets. The relief is commonly referred to as retirement relief, although it is not necessary for the individual to retire to qualify for the relief. Section 599 TCA 1997 provides for retirement relief on a disposal of qualifying business assets by an individual to a child, as defined for the purpose of that provision; section 598 TCA 1997 provides for retirement relief where such assets are disposed of to third parties. As qualifying assets may include those in use in farm trades, retirement relief may be availed of under section 599 TCA 1997 by an individual, aged 55 or more, in respect of the intergenerational transfer of a farm trade – the measure of relief available depends on the date of the transfer, the individual’s age at the date of the transfer and the aggregated value of the assets transferred.
As noted above, section 599 TCA 1997 provides for relief from CGT on the disposal of qualifying business assets to a child, as defined in this section, of the individual or of that individual’s civil partner.
The meaning of “child” for the purposes of this relief includes:
• the child of the civil partner of the individual,
• a child of a deceased child,
• a nephew or niece who has worked substantially on a full-time basis in the trade concerned for the period of five years ending with the disposal in question, and
• a foster child, where that child satisfies the conditions in terms of the residence, care and maintenance of that child for 5 years before the child attains the age of 18.
The relief applies to gains arising on the disposal of qualifying business assets, which, in general, are chargeable assets which have been used by the individual for the purpose of the trade for at least 10 years prior to the disposal of same. In the context of farm trades, such chargeable assets include, subject to certain conditions being satisfied, farm land which has been leased, including under the 1992, 1999 or 2005 EU “Early Retirement from Farming” Schemes, as well as EU Single Farm Payment entitlements, where such payment entitlements are disposed of at the same time and to the same person as land supporting a claim to payment.
The relief also applies to the transfer by an individual of shares in a farm company that is the individual’s family company. A family company is a company in which the individual holds at least 25 per cent of the voting rights or, in a case where the individual and his/her family hold at least 75 per cent of the voting rights, the individual holds not less than 10 per cent of those rights. In addition, the individual must have been a working director of the company for a period of not less than 10 years during which they have been a full-time working director for not less than 5 years.
For disposals to a child made on or after 1 January 2025, a lifetime limit of €10 million generally applies to the market value of the qualifying assets to which relief under this section applies. However, a €3 million cap applies to disposals of qualifying assets by individuals aged 70 years and over.
Should the child to whom qualifying assets, the aggregated value of which does not exceed €10 million, are transferred dispose of those assets within 6 years of the transfer, the child becomes liable for the CGT relieved on the initial transfer, in addition to the CGT liability which may accrue to the child in respect of their disposal of the assets.
The CGT liability which arises to an individual on the transfer of qualifying assets to a child on or after 1 January 2025, the value of which exceeds the €10 million lifetime limit, may be deferred by the individual making the transfer. In circumstances where an individual has chosen to defer the CGT liability, the relevant qualifying assets are subject to a 12-year retention period. Where the child disposes of such assets within 12 years of the date of transfer, the deferred CGT, which would have been charged on the individual, is assessed and charged on the child, in addition to the tax on any gain made by the child on his/her disposal of the assets.
