Entrepreneur Tax Relief In Ireland: The Smart Founder’s Guide To Paying Less And Growing Faster

Imagine a SaaS founder spends six years building a company, finally sells her stake for €1.2 million, and ends up with a tax bill of nearly €400,000. The worst part? She finds out three weeks after closing that proper planning could have cut that bill by more than half.

Stories like this happen more often than you’d think.

Entrepreneur tax relief in Ireland allows qualifying founders to reduce Capital Gains Tax from 33% to 10 — and following Budget 2026, the lifetime threshold has increased from €1 million to €1.5 million. That means up to €1.5 million of gains can now be taxed at just 10% instead of the standard CGT rate.

Here’s what most founders miss: this relief isn’t something you sort out when the offer comes in. The eligibility clock starts ticking years before a sale. If your shareholding, role, or company structure isn’t right at least three years in advance, the relief simply won’t apply — no matter how good the exit looks on paper.

If you’re building an e-commerce brand, running a marketing agency, or scaling a SaaS startup, entrepreneur relief could be worth six figures to you. The difference between paying 33% and 10% isn’t just a nice bonus. For many founders, it’s the difference between reacting to an exit — and having real options when the time comes.

Let me show you exactly how entrepreneur relief in Ireland works, what changed in Budget 2026, and how to structure your business early so you actually qualify when it matters.

What Is Entrepreneur Tax Relief In Ireland?

Back in 2014, the Irish government introduced Entrepreneur Relief to encourage founders to build and scale trading businesses. The logic was simple: if we want more people starting companies and creating jobs, let’s reward them when they eventually sell.

The relief does something remarkable. Instead of paying the standard 33% CGT rate on gains from selling your business shares, you pay just 10%. That’s it. Same gain, two-thirds less tax.

But here’s where it gets interesting. In 2016, Revenue updated the rules and introduced what’s now called Revised Entrepreneur Relief. The changes expanded who could qualify and set clearer guidelines on what counts as “active involvement” in your business.

Think of it this way: Revenue wants to support real founders who’ve built real businesses, not passive investors who happen to own shares. This relief is specifically designed for people like you who’ve spent years building something from scratch.

How does it differ from other CGT reliefs? Let me break it down:

• Retirement Relief is for people aged 55+ who’ve owned their business for at least 10 years
• Business Relief relates to inheritance and gift tax, not CGT
• Section 729 reliefs cover specific scenarios like business restructuring

Entrepreneur Relief sits in its own category. It’s for active founders and directors who’ve held qualifying shares for at least three years. Age doesn’t matter. Whether you’re 28 or 58, if you meet the criteria, you qualify.

Who Qualifies For Entrepreneur Tax Relief?

You can’t just own shares in a company and expect to claim this relief. Revenue has set strict qualification criteria that you need to meet, and I’ve seen too many founders fall short on one or two requirements.

The Three Core Requirements

1. Shareholding Requirements

You must own at least 5% of the ordinary shares in the company — not preference shares, not loan notes, but ordinary shares with voting rights.

You also need to have held those shares for a continuous period of at least three years at some point before the sale.

(Under current rules, those three years don’t need to be the three years immediately before disposal — they can occur at any time prior.)

Sell at 2 years and 11 months? Still no relief.

2. Director or Employee Status

You must be either a director or an employee of the company for at least three years leading up to the disposal. This isn’t about having your name on the letterhead. Revenue wants to see that you were genuinely involved in running the business.

3. Active Participation

This is where it gets subjective, and where I see most disputes with Revenue. You need to prove you played a “material” role in the company’s management or operations.

What does material mean? Let me give you some examples:

• Attending board meetings regularly
• Making strategic decisions about product or market direction
• Managing teams or departments
• Being responsible for key business functions like sales, operations, or product development

If you’re a passive investor who occasionally checks in? That won’t cut it. Revenue wants evidence of genuine, ongoing involvement.

What’s Changing In 2026? Budget Updates You Need To Know

From 2026 onwards, the lifetime threshold for revised entrepreneur relief is increasing from €1 million to €1.5 million. That’s an extra half million euros of gains you can claim the 10% rate on.

Let me show you what this means in real numbers. Say you’re selling shares and making a €1.5 million gain:

Under the old rules (up to 2025):

• First €1 million taxed at 10% = €100,000
• Remaining €500,000 taxed at 33% = €165,000
• Total tax = €265,000

Under the new rules (from 2026):

• Full €1.5 million taxed at 10% = €150,000
• Total saving = €115,000

That’s a six-figure difference just from timing your exit strategically.

Who Should Act Before or After 2026?

If your expected gain is around €1 million or less, the timing doesn’t matter as much. You’ll get the full benefit either way.

But if you’re looking at gains between €1 million and €1.5 million, and your exit can wait until 2026, you’ll save significantly by holding off. Just make sure you’re still meeting all the other qualification criteria while you wait.

For gains above €1.5 million, you’ll max out the relief either way. Your decision should be based on other factors like market conditions, business performance, and your personal circumstances.

If you’ve used part of your €1 million lifetime limit before 2026, the new €1.5 million cap will still give you up to an extra €500,000 of gains at 10% — but the exact benefit depends on how much of the old limit you’ve already used.

How To Use Entrepreneur Relief As A Strategic Planning Tool

Most founders treat tax planning as something you do after a deal is agreed. That’s backwards. The best exits I’ve worked on started planning three to five years before the sale.

Structuring Your Company for Future Sale

From day one, think about your share structure. Are you setting up as a limited company with ordinary shares? Good. Are you planning to issue different share classes later? Make sure you understand how that affects your 5% holding calculation.

Funding rounds have a sneaky way of pushing founders below the 5% threshold. An e-commerce founder raising capital multiple times might not notice her stake has dropped to 4.8%. When exit planning begins, she needs to explore share buybacks or other solutions — far more complex than simply keeping an eye on dilution throughout.

Capital vs Income: Deciding When and How to Exit

This is crucial. Entrepreneur Relief only applies to capital gains from selling shares. If you structure your exit as a salary or bonus payment, you’ll pay income tax and USC instead. That could be over 50% depending on your other income.

Your exit needs to be a genuine share sale to a third party. Taking dividends? That’s income. Liquidating the company and taking the proceeds? That might be capital, but it depends on the specifics.

Founder Scenarios

Let me walk you through three common situations:

SaaS Founder Exit

You’ve built a software company over five years. You own 15% after early funding rounds. A larger tech company wants to acquire the business for €10 million. Your shares are worth €1.5 million.

With proper planning and entrepreneur relief, you’ll pay €150,000 in CGT. Without it? €495,000. You’ve just saved €345,000.

E-commerce Owner Restructuring

You started an online retail business three years ago. You’re considering selling to a private equity firm but you’ve structured everything through a holding company that also owns rental properties.

Here’s the problem: entrepreneur relief only applies to trading companies. If your holding company has significant investment activities, you might not qualify. We need to restructure before you start sale discussions. That means potentially spinning off the trading business into its own entity and making sure you’ve held the new shares for three years before selling.

Marketing Agency Founder Combining Reliefs

You launched your agency four years ago. You claimed start up relief for entrepreneurs (SURE) in years one and two, getting valuable income tax refunds that helped with cash flow. Now you’re planning to sell.

Good news: you can use both reliefs. SURE covered your early-stage income tax exposure. Now entrepreneur relief will slash your CGT bill when you exit. That’s smart tax planning across the business lifecycle.

Common Pitfalls That Disqualify Founders

I’ve seen brilliant founders lose out on this relief because of easily avoidable mistakes. Let me save you from the most common ones.

Not Meeting the Active Participation Criteria

Revenue isn’t stupid. If you claim you were materially involved in the business but you’ve got no evidence, they’ll reject your claim.

Keep records. Save board minutes. Document your involvement in key decisions. If you’re challenged, you need to prove your case.

Shareholding Dilution

You started with 10% of the company. After three funding rounds, you’re down to 4.2%. You think you qualify because you originally held more than 5%.

Wrong. You need to hold at least 5% at the time of disposal. If you’ve diluted below that threshold, you’re out.

Exiting Too Soon or Failing to Plan

The three-year holding period is non-negotiable. Sell at year two? No relief. Take on a buyer who insists on an earn-out structure where you technically dispose of shares before three years? No relief.

What happens if you get a great offer at month 32? You’ve got options. Deals can be structured with delayed completion dates, option agreements, or other mechanisms that push the actual share transfer past the three-year threshold. It’s not always straightforward, and it requires buyers who understand the tax implications, but creative structuring can save the relief.

What About Start-Up Relief For Entrepreneurs (SURE)?

Let’s clear up the confusion between these two reliefs. They work at different stages of your business journey.

SURE is an income tax relief for first-time founders. When you’re starting out and drawing a small salary or dividend, you can claim refunds on income tax you paid in the previous six years. It’s designed to help with early-stage cash flow.

Entrepreneur Relief is a CGT relief for when you eventually sell your business. It doesn’t matter if it’s your first startup or your fifth.

Can You Qualify for Both?

Absolutely. In fact, using both is smart tax planning. Claim SURE in years one through three to improve cash flow when you need it most. Then use entrepreneur relief when you exit to minimise your CGT bill.

The timeline looks like this:

• Years 1-3: Focus on building the business, claim SURE if you’re a first-time founder
• Years 3-5: Continue growing, keeping your shareholding above 5% and maintaining active involvement
• Year 5+: When you’re ready to exit, structure the sale to maximise entrepreneur relief

How A Founder Saved €276,000 Using Entrepreneur Relief

Say a SaaS founder launches her company in 2018. After bringing in two co-founders and completing a seed round in 2019, she holds 10% of the ordinary shares. She’s CEO and heavily involved in product development, sales strategy, and team building.

In 2023, after five years, a US tech company acquires the business for €12 million. Her 10% stake is worth €1.2 million.

Without Entrepreneur Relief:

• Capital gain: €1.2 million
• CGT at 33%: €396,000
• Net proceeds: €804,000

With Entrepreneur Relief:

• First €1 million taxed at 10%: €100,000
• Remaining €200,000 taxed at 33%: €66,000
• Total tax: €166,000
• Net proceeds: €1,034,000

Potential saving: €230,000

But here’s the kicker. If this founder waited until 2026 to sell (assuming similar valuation), she could claim the 10% rate on the full €1.2 million, paying just €120,000 in total CGT. That’s a potential €276,000 difference compared to the standard rate.

What makes the difference in scenarios like this? Early planning. Founders who position themselves for entrepreneur relief start thinking about their exit structure years in advance — ensuring their shareholding stays above 5%, documenting their active involvement, and timing the sale to maximise available reliefs.

Your Pre-Sale Exit Checklist: How To Get Tax-Ready

If you’re planning an exit in the next 12-36 months, start working through this checklist now.

Company Structure Review

• Confirm you own at least 5% of ordinary shares
• Verify your shareholding percentage calculation (especially if there are preference shares or loan notes)
• Check you’ve held shares for the full three-year period
• Review any dilution events and their impact on your holding

Tax Due Diligence Items

Prepare these documents before you start sale discussions:

• Share certificates proving ownership and acquisition dates
• Board minutes showing your active involvement
• Employment contracts or director appointment letters
• Evidence of material participation (emails, strategy documents, presentations)
• Tax compliance certificates from Revenue
• Confirmation of CGT calculations from your accountant

Questions for Your Advisor

Before you sign anything, ask:

• Do I qualify for entrepreneur relief based on my current shareholding and involvement?
• What documentation does Revenue typically request?
• Should I delay the sale to take advantage of the 2026 threshold increase?
• Are there any share structure issues that could disqualify me?
• How should we structure the sale agreement to preserve relief eligibility?

Reporting and Documentation Readiness

Revenue requires specific documentation when you claim entrepreneur relief. Get this sorted early:

• Form CG1 (Capital Gains Tax return) with entrepreneur relief claim
• Supporting documentation proving qualification criteria
• Professional advisor sign-off on the calculations
• Proof of share disposal and consideration received

Don’t wait until after the sale closes. By then, it’s too late to fix any issues.

How Around Finance Helps Founders Maximise Their Exit

This is where we come in. I’ve worked with dozens of Irish founders through exits, and the ones who fare best are those who start planning early.

We help with strategic finance and tax structuring well before you’re in sale discussions. That means reviewing your share structure, ensuring you’re meeting active participation requirements, and timing your exit to maximise available reliefs.

Our tax services aren’t just about compliance. We’re thinking three years ahead, making sure you’re set up to claim every relief you’re entitled to.

We also provide monthly finance visibility using tools like Xero, QuickBooks, Sage, Surf Accounts, Syft Analytics, and Store Hero. Why does this matter for exit planning? Because buyers want clean books and clear financial history. The founders with solid monthly reporting get better valuations and smoother due diligence processes.

If you’re 1-3 years out from a potential exit, contact us for an exit planning session. We’ll review your current structure, identify any gaps in your entrepreneur relief qualification, and create a timeline for getting everything sorted.

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