Entrepreneur Relief: lifetime limit increased to €1.5M from January 2026

Entrepreneur Relief continues to play a crucial role in supporting founders and business owners in Ireland by offering a reduced 10% Capital Gains Tax (CGT) rate on qualifying business disposals. The upcoming amendments, confirmed as part of Finance Bill 2025 and taking effect on 1 January 2026, broaden the opportunity for tax‑efficient exits. For those planning a sale in the coming years, the time to prepare is now.

Key change: lifetime limit increasing to €1.5M

From 1 January 2026, the lifetime limit for Revised Entrepreneur Relief increases from €1 million to €1.5 million. This provides an additional €500,000 of gains eligible for the reduced 10% CGT rate. 

The Finance Bill also clarifies how earlier disposals aggregate towards the updated limit. While gains realised between 2016 and 2025 continue to count towards the original €1 million cap, individuals disposing of assets from 2026 onwards can still access the incremental benefit up to €1.5 million. This effectively ensures individuals making disposals from 2026 onwards can benefit from the €500,000 increase in the lifetime limit in circumstances where they have previously disposed of chargeable business assets prior to 31 December 2025.

Qualifying conditions: do you meet the requirements?

The qualifying criteria remain unchanged. Key conditions include:

• Owning at least 5% of the ordinary share capital of a qualifying trading company or holding company
• Holding the shares or business assets for a continuous period of three years. This three‑year holding period for shares may occur at any time prior to the disposal, whereas for trade or business asset disposals, the three‑year period must fall within the five years immediately before the disposal.

Holding the shares or business assets for a continuous period of three years. This three‑year holding period for shares may occur at any time prior to the disposal, whereas for trade or business asset disposals, the three‑year period must fall within the five years immediately before the disposal.

Importantly, the relief applies only to qualifying business assets, excluding investment assets, development land and assets personally owned outside the company.

Holding company structures and the relief

Where a business is operated through a holding company, Entrepreneur Relief can still apply, provided the structure meets the definition of a “qualifying group.” Under Revenue guidance, a holding company qualifies where:

• It holds shares in other companies, all of which are its 51% subsidiaries
• Its business consists wholly or mainly of holding shares in those subsidiaries.

For shareholders disposing of shares in a holding company, the same core conditions apply, such as the requirement to own at least 5% of the ordinary share capital and to satisfy the director/employee working‑time condition but these conditions can be met through involvement in any company within the qualifying group, not solely the holding company itself.

It is also important to note that for a group to qualify, all subsidiaries must themselves carry on a qualifying trading business. The presence of non‑trading or dormant subsidiaries, or companies engaged in excluded activities such as investment holding or property rental, can cause the entire group to fall outside the scope of the relief. This is a common pitfall, and care must be taken when establishing or restructuring a group to ensure future eligibility for relief.

This is particularly relevant in sale processes involving groups, as a purchaser’s proposed structure such as hiving out assets, leaving dormant entities in place or reorganising the group pre‑completion may impact qualification unless reviewed in advance.

Preparing for a future sale: steps to take now

With the enhanced lifetime limit applying only to disposals from 2026 onwards, now is an ideal time for business owners to evaluate whether they meet the qualifying criteria for Entrepreneur Relief. Many founders discover at the point of exit that they fail to meet the shareholding, time‑in‑service, or ownership holding period conditions, issues that often can be resolved with careful planning.

Practical steps to consider:

• Review your shareholding structure to ensure you meet the 5% threshold.
• Assess your working time involvement to confirm eligibility as an employee or director.
• Identify any excluded assets that could jeopardise qualification.
• Assess your group structure (if applicable) where you operate within a holding company structure, confirm that all subsidiaries are 51% trading subsidiaries and that no dormant or non‑trading companies exist

If you are already at the sale negotiation stage, whether reviewing a letter of offer, heads of terms or a share purchase agreement, it is critical to ensure the structure of the transaction does not inadvertently jeopardise your entitlement to Entrepreneur Relief.

In particular, you should carefully consider and seek advice on whether any earn outs or deferred consideration will have an impact on your eligibility. For sale processes involving groups, a purchaser’s proposed structure should be carefully reviewed if they are proposing to hive out assets resulting in dormant entities or reorganising the group pre‑completion, as this may impact qualification and should be reviewed in advance.

Conclusion

The enhancement of Revised Entrepreneur Relief represents a valuable opportunity for business owners preparing for an exit. However, accessing the relief depends on meeting strict qualifying conditions. Early planning remains essential to ensuring you can fully benefit from the increased lifetime limit when the time comes.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Forvis Mazars corporate tax team below: