Noel McCarthy (Cork East, Fine Gael)
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115. To ask the Minister for Finance if a review of entrepreneur relief under the capital gains tax code is being considered, particularly in regard to the €1 million lifetime limit and its competitiveness relative to international norms (details supplied); and if he will make a statement on the matter. [39409/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Revised Entrepreneur Relief (RER) is provided for by section 597AA of the Taxes Consolidation Act 1997. RER provides that a reduced 10% rate of Capital Gains Tax (CGT) applies in respect of a chargeable gain or chargeable gains on a disposal or disposals of qualifying business assets by an individual up to a lifetime limit of €1 million. Any chargeable gain in excess of the €1 million lifetime limit is to be taxed at the standard rate of CGT which is currently 33%.

There have been two substantive reviews of the RER undertaken by the Department of Finance in recent years while the Commission on Taxation and Welfare Report also addressed certain policy aspects of the relief, with a recommendation that it be extended, leading to the introduction of an Angel Investors CGT Relief.

The 2019 review undertaken by Indecon Consultants found that the relief did not have a significant impact on the initial investment decision. Rather, the relief was found to have influenced the timing of asset disposals.

In 2023 the Department carried out a further targeted review and Cost Benefit Analysis (CBA) of the RER with the support of the Department of Enterprise, Trade and Employment and Enterprise Ireland. The CBA recommended that any decision to modify or relax the eligibility criteria or scope of the relief be carefully considered in terms of its potential Exchequer impact.

The current RER scheme compares favourably with international equivalent schemes such as the UK Business Assets Disposal Relief (BADR) which has been significantly tightened in recent years. The UK BADR offers a lifetime limit of £1 million and a less favourable reduced rate of 14% rising to 18% in 2026 compared to the RER reduced rate of 10%.

As with all tax incentives the RER is kept under review and any amendments must have regard to impacts on Exchequer costs as well as wider CGT policy.