Expertly Put is a series of exclusive conversations with industry experts, designed to help business owners and management teams gain a deeper understanding of the topics that matter most. In previous editions we have focused on the legal and financial side of preparing a business for sale. In this edition, Fitzgerald Power’s SME Partner Jennifer Power sits down with one of our newest team members, Brian Kelly, Taxation Partner, who brings over 20 years of experience advising on Irish and international tax matters. Brian specialises in business and investment structuring in a tax-efficient manner, helping clients minimise exposures on transactions while planning for the future. Together, Jennifer and Brian explore the tax implications of selling a business, from structuring the deal to maximising reliefs.
Jennifer Power:
Brian, thanks for joining me. Let’s start with the basics. What’s the first tax-related decision a business owner should consider when preparing for a sale?
Brian Kelly:
Thanks Jennifer. One of the most important early decisions is whether the sale will be structured as a share sale or an asset sale. This choice has significant implications for both the seller and the buyer, not just in terms of tax, but also in terms of risk, flexibility, and commercial outcomes.
For sellers, share sales are often more tax-efficient. They may qualify for reliefs like Retirement Relief or Entrepreneur Relief, and stamp duty is only 1% versus 7.5% on assets. The buyer also acquires the company as a going concern.
However, asset sales can be more attractive to buyers, and in some cases, they may be the better option for sellers too. Buyers often prefer asset deals because as they allow buyers to pick and choose assets, avoid historic liabilities, and potentially claim capital allowances. Asset sales also allow for more flexibility in structuring the deal. For example, the seller might retain certain assets like property or cash reserves, or exclude specific liabilities. This can be useful in partial exits or where the business includes multiple divisions.
That said, the downside for sellers is that asset deals can trigger multiple tax charges (CGT, corporation tax on stock, VAT, and higher stamp duty), and sometimes even a double tax charge if the company sells assets and then distributes the proceeds to shareholders. So, while asset sales offer commercial and structural advantages, they can be more complex from a tax planning perspective.
Ultimately, the choice between a share sale and an asset sale depends on the nature of the business, the buyer’s preferences, and the seller’s tax position. Early advice is essential to model both scenarios and determine the optimal structure.
JP:
What kind of reliefs are available for an individual selling shares in a trading company or a sole trader selling their business to help reduce the tax bill?
BK:
There are a few key ones. Entrepreneur Relief allows you to pay CGT at 10% on gains up to €1 million. Retirement Relief is another important one, especially for business owners aged 55 or over. It can eliminate CGT entirely, subject to lifetime thresholds. For disposals to third parties, the thresholds are €750,000 for those aged 55–69 and €500,000 for those aged 70 and over. For disposals to children, the threshold is €10 million for those aged 55–69 and €3 million for those aged 70 and over.
Entrepreneur Relief, on the other hand, reduces the CGT rate to 10% on gains up to €1 million. It’s available to individuals who have owned qualifying business assets for at least three years and have worked in the business in a managerial or technical capacity for three of the last five years.
Where both reliefs apply, the taxpayer can choose which relief to apply. However, you can only apply one relief per transaction, and using one can eat into the limits of the other. That’s why timing and deal structure are critical – sometimes splitting a sale between a third party and family can help maximise both.
JP:
That sounds complex. What kind of planning should business owners be doing?
BK:
It really comes down to understanding your long-term goals and structuring your exit accordingly. For instance, if you’re considering a sale to a child, you might want to ensure the value doesn’t exceed the €10 million retirement relief threshold to avoid triggering CGT. If you’re selling to a third party, you might want to keep the consideration under €750,000 to qualify for full Retirement Relief. And if you’re expecting a larger gain, you’ll need to think about timing and how to maximise the reliefs.
Another example is transferring shares to a spouse. If they work in the business they may be able to satisfy the conditions of Retirement Relief and / or Entrepreneur Relief. However, if the transfer between spouses is done after the age of 55 it can reduce the lifetime thresholds for Retirement Relief.
One strategy we often recommend is the use of a hive-out. This involves transferring part of the business to a new company under a tax-neutral reconstruction, allowing you to separate different business lines or assets. It’s particularly useful for succession planning, external investment, preparing for a future sale, or separating the trade from property investments. If structured correctly, a hive-out can be done without triggering CGT, stamp duty, or VAT, thanks to various reliefs.
Hive-outs also allow you to isolate risks and maximise value. For example, if you have a trading business and a property investment within the same company, separating them can make each more attractive to different buyers. It also helps ensure that the sale of one part doesn’t affect the tax treatment of the other.
JP:
In respect of hive-outs. Are there any risks to be aware of?
BK:
Absolutely. A hive-out is a form of corporate reconstruction where part of a business is transferred to a new company, typically to separate different business lines, facilitate succession, or prepare for a sale. When structured correctly, hive-outs can be tax-neutral under Irish legislation. These relieving provisions allow for the deferral of CGT, stamp duty relief, and the transfer of assets at tax-written-down value.
However, the hive-out must be done for commercial reasons and not just for the avoidance of tax. A determination issued by the Tax Appeals Commission in February 2025 offers a cautionary tale. In that case, the taxpayer attempted to use a share-for-share exchange to transfer shares into a holding company just before a sale. The relief was denied because the transaction failed two key tests. Firstly, the paperwork wasn’t fully compliant, and secondly, the transaction appeared primarily tax-driven, given it happened just before a sale.
This case highlights that even if a hive-out is commercially justifiable, it must be executed with precision, and preferably well in advance of commencing any sales process. The documentation must be clear, contemporaneous, and compliant with the statutory language. And the taxpayer must be able to demonstrate that the transaction was not primarily motivated by tax avoidance.
JP:
What about due diligence? What should sellers be doing before they go to market?
BK:
Buyers will look closely at VAT compliance, payroll, corporation tax filings, and any outstanding liabilities. Being prepared for the tax due diligence process is essential. You don’t want surprises at the eleventh hour. In a recent webinar, we also highlighted the importance of tidying up employment contracts, resolving property title issues, and making sure your financial records are clean.
Sellers need to be prepared for the sale process. Ideally, this starts at least two years before any transaction. That means conducting a thorough internal review, identifying and resolving any issues, and setting up a well-organised data room. The data room should contain all the key documents, financials, contracts, tax filings, regulatory licences, so that when the time comes, you’re ready to move quickly and confidently. It is always reassuring for a buyer when they see a seller who is on top of all the key financial, legal, and tax issues.
JP:
Let’s talk about valuation. How does tax come into play?
BK:
Valuation is one of the most sensitive and strategic aspects of any sale. It’s not just about what the business is worth – it’s about how that value is structured and taxed. In our recent webinar on pharmacy deals, valuations were typically based on maintainable earnings (EBITDA) and a sector multiple of 4–6, with adjustments for net assets and property. Unlike most sectors, pharmacy sales usually don’t involve a working capital adjustment. For any SME, it’s vital for owners to understand the sector drivers and work on improving them well in advance of an exit.
From a tax perspective, the structure matters. In a share sale, the buyer acquires the whole company, including liabilities, and the seller pays CGT (usually 33%, with reliefs like Retirement or Entrepreneur Relief potentially reducing this). Stamp duty is just 1%.
In contrast, an asset sale involves the buyer purchasing specific assets – such as stock, goodwill, or property – directly from the company. This can trigger multiple tax charges, including VAT, income tax, and CGT. Importantly, the stamp duty rate on asset sales in is 7.5%, which is significantly higher than the 1% rate for share transfers, although certain assets may be exempt or outside the scope of stamp duty.
Another key factor is inherent tax. This essentially refer to tax liabilities which a company may suffer if it were to ever sell its assets. For example, if the value of the company premises had increased significantly since it acquired the asset. A share sale will not trigger a tax charge on that property, nor will the buyer get a step up in its base cost. Buyers will discount for this hidden tax cost in the company. So it is important to factor this into your thinking.
Sellers should be aware of this dynamic. If your company has significant inherent tax, it could reduce the price a buyer is willing to pay. That’s why we always recommend a pre-sale tax review, ideally two years before the transaction to identify and address any issues before they become deal-breakers.
JP:
When should business owners start thinking about tax?
BK:
Honestly, the earlier the better. Succession and exit planning should be part of your long-term strategy, not something you scramble to do when a buyer shows up. Ideally, you’d start thinking about it at least two years before a potential sale. That gives you time to restructure if needed, optimise your tax position, and ensure you qualify for the relevant reliefs.
But it’s not a one-time exercise. Circumstances change – your business grows, your family situation evolves, and legislation shifts. That’s why it’s important to revisit your tax plan every few years. A structure that worked five years ago might not be optimal today. Regular reviews with your tax advisor can help you stay ahead of the curve and avoid costly surprises.
JP:
That’s a lot to digest. Final thoughts?
BK: Selling a business is a major milestone. It’s not just a commercial transaction, it’s a tax event. With the right planning, advice, and structure, you can significantly reduce your tax exposure and make the most of the opportunity.
Whether you’re selling to retire, reinvest, or simply move on to the next chapter, it’s worth taking the time to understand the tax landscape. And don’t wait until the deal is on the table, start planning early, ideally at least two years in advance. That way, you can optimise your position, avoid common pitfalls, and ensure a smooth and successful exit.
We hope you enjoyed the read. Until next time!
For those looking to learn more, we recently published a three-part white paper series, called Strategy360, which go through the process of preparing for and selling a business. They are on our website if you want to review here.
We are also hosting a webinar in October with Brian and Noel Winters, our corporate finance partner, to walk through these strategies in detail from a financial and tax perspective for an SME. Please get in touch or sign up to our mailing list if you want to be included.
Sign up for Strategy 360 white paper series:
Part #1: Future Proofing Your Business – Why Strategy Comes First.
Why focusing only on the short term risks resilience and long-term value – and how the Strategy 360 framework can help.
Part #2: Powering Success – How Finance and Operations Drive SME Growth.
Exploring how better financial systems and operational discipline turn ambition into sustainable growth.
Part #3: From Growth To Legacy – Exit and Tax Strategies for Business Owners.
How early exit readiness and tax planning protect and maximise your business value.
