Dáil Éireann Debate, Tuesday - 18 November 2014
155. Deputy Lucinda Creighton asked the Minister for Finance the length of time he expects it will take to negotiate with the European Commission on the commencement of the capital gains tax scheme for entrepreneurs which was passed into law on 18 December 2013; his views on it being a reasonable delay; and if he will make a statement on the matter. [44365/14]
View answer168. Deputy Lucinda Creighton asked the Minister for Finance the time it will take to negotiate with the European Commission regarding the commencement of section 45 of the Finance (No. 2) Act 2013 which provides the capital gains tax relief for entrepreneurs as announced in budget 2014. [44035/14]
View answerI propose to take Questions Nos. 155 and 168 together.
Section 597A of the Taxes Consolidation Act 1997 provides for CGT entrepreneur relief as introduced by Budget 2014 and Section 45 of the Finance (No. 2) Act 2013. The relief was introduced subject to State-aid approval and discussions and exchanges have been taking place with the EU Commission on that issue. The requirements can be complex and the process can take time.
Arising from those discussions, a number of changes are being made in Finance Bill 2014 to the CGT entrepreneur relief provisions in order that the relief would satisfy the EU Commission's new General Block Exemption Regulations introduced earlier this year, thus obviating the need for formal EU approval of the relief from a State-aid perspective.
The changes involve targeting the relief at individuals involved in newly created enterprises or enterprises created within the last 7 years, placing a cap of €15 million on the total risk finance investment made in each such enterprise and ensuring that the risk finance investment is made by the entrepreneurs at the commencement of the new business.
Other changes are being made to the relief to make it more compatible with the commercial reality of conducting business on the ground.
These changes include:
- Clarifying that an enterprise does not have to be a micro, small or medium-sized enterprise at the date of disposal of the chargeable business asset in order for the individual owner to qualify for the relief.
- Amending the ownership requirement from control - meaning 50% or more ownership of shares - to 15% ownership of ordinary shares, as in practice new enterprises often have two or more individuals as shareholders or co-owners.
- Providing that investment in the new business through a holding company can qualify for the relief as this is a standard investment structure.
- Enabling disposals of chargeable business assets in forms other than a direct disposal of shares in a qualifying company to qualify for the relief.
The revised provisions of Section 597A (as included in section 46 of Finance Bill 2014) will be effective from the passing of the Finance Bill. The CGT relief will apply, among other conditions, where new chargeable business assets have been acquired on or after 1 January 2014.
