Using an Irish personal holding company to grow and protect your wealth

Business owners and investors are liable to capital gains tax ('CGT') at 33% on gains arising on the disposal of shares and business assets worth more than €1m.  This tax can be substantially reduced, deferred indefinitely or potentially avoided altogether through the use of an Irish personal holding company.  

On 1 January 2016, the Government introduced a reduced capital gains tax rate of 20% on the sale of business assets, including shares, subject to an overall limit of €1m.  This relief favours entrepreneurs in small businesses, but leaves working shareholders and investors in medium and large businesses exposed to tax at 33% on returns on investments over this amount.

These taxes can be avoided if investing in trading entities through an Irish Personal Holding Company (“IPHC”).

What are the benefits of an IPHC?

IPHCs enable individual or corporate investors to access tax-free returns on investments in trading entities. When an Irish company disposes of shares in a subsidiary this generally gives rise to CGT on the gain arising at 33%.  IPHCs are exempt from companies CGT on disposals of shares in a qualifying subsidiary.  The exemption also applies to gains arising on the disposal of assets related to shares, such as options and convertible securities.

Click here to download our briefing note on IPHC's