Revenue Tax Briefing

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Revenue Tax Briefing Issue 47, April 2002


Retirement Relief And Reconstructions

Where a business is transferred to a new company, with substantially the same shareholding, as part of a reconstruction, Sections 587 and 615 TCA 1997 apply and no tax is chargeable on such disposals. Essentially, the effect of the legislation is to treat both shareholders and company as if, in relation to the business transferred, they were the original company and its shareholders accordingly.

Where Section 587 TCA 1997 applies, the shares are deemed to have been acquired at the same time as the original holding. Therefore in relation to any new holding of shares in the new company, the ten year test is satisfied provided the original holding was acquired at least 10 years previously.

In relation to the computation of retirement relief assets held by the new company could be chargeable business assets provided they were acquired by the original company at least 10 years previously.

Generally in the case of working directors an individual does not qualify for retirement relief until he/she has been a working director of the new company for at least 10 years.

However, where there is a reconstruction to which Sections 587 and 615 TCA 1997 applies, Revenue will accept that provided all other conditions are satisfied, the period for which the individual was a working director of the original company will be taken into account for any claim to retirement relief, as appropriate.