Private company valuation for tax purposes in Ireland


The valuation of private companies for tax purposes holds significant importance within the Irish tax system. It plays a crucial role in accurately assessing the tax liability of shareholders in many different circumstances. Valuations undertaken for tax purposes must be guided by the relevant legislation for each tax head and often the valuation adopted for one tax head (e.g. CGT) may be different to the valuation adopted for second tax head (e.g. stamp duty). Where shares in a company are valued incorrectly, Revenue may impose penalties and interest on any under declared tax liabilities.

Capital Gains Tax (CGT)

The relevant legislation for determining the valuation of shares for Irish CGT purposes is section 548 TCA 1997. Shares are to be valued at “market value” which means the price those shares may reasonably be expected to fetch on a sale in the open market. In valuing those shares no reduction in value is to be made on the assumption that selling all of the shares at the one time would result in a lower price being fetched. Where the shares to be valued are not quoted on a stock exchange at the time at which their market value is to be determined it is to be assumed that there is available to any prospective purchaser of the shares all of the information which a prudent purchaser of those shares might reasonably require if such purchaser was proposing to purchase the shares from a willing vendor by private treaty at an arms length.

Capital Acquisitions Tax (CAT)

The relevant legislation for valuing shares for CAT purposes is section 26 CATCA 2003. Shares are to be valued at “market value” which is to be taken to be the price which such shares would fetch if sold in the open market on the date on which the share is to be valued in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the shares. As with valuation for CGT purposes, no reduction in value is to be taken for any assumed decrease in value if all of the shares were sold at the same time, also any prospective purchaser is assumed to have all of the relevant information available to them pertaining to the shares and the company. However, section 27 CATCA 2003 contains specific provisions in relation to the valuation of shares in private companies for CAT purposes which will often create significant divergence between the valuation adopted for CAT and for other taxes. Broadly speaking, section 27 prevents the application of minority discounting to any group of shares that is under family control.

Stamp Duty

The relevant legislation for valuing shares for stamp duty purposes is contained in section 19 SDCA 1999. Shares for stamp duty purposes are valued in the same fashion that they are valued for CAT purposes, however the provisions of section 27 CATCA 2003 do not apply to determine the value of shares for the purposes of stamp duty (i.e. minority discounting does apply for stamp duty purposes).


By recognizing the significance of company valuation, shareholders of private companies in Ireland can effectively manage their tax obligations. Circulo have significant experience in valuing shares in private companies for all tax purposes. For further information please contact or

Relationship Breakdown: Tax Implications

Ireland has seen been both dramatic and welcome changes to the landscape of formalising and dissolving relationships over the last two decades. Among other things, we have seen a historical shift in modernising our tax code and moving it towards equality for all couples. We started the journey in 1995, with the divorce referendum passing by an incredibly tight 0.3% margin. The resultant Family Law (Divorce) Act 1996 allows a court to grant a decree of divorce where it feels confident that all of  the applicants are aware of the alternatives  to divorce and that there is no possibility of reconciliation. The tight margin was arguably due to a perceived worry that the “floodgates” would open and divorce rates would skyrocket. However, these fears have not yet been reflected in the statistics.
Read more…

Accounting for undistributed income

A recent tax appeal case has highlighted the issues that the close service company surcharge can create for incorporated accountancy practices

Irish tax legislation provides for a surcharge on the undistributed income of certain professional service companies that are ‘close companies’ – that is, a company that is under the control of five or fewer participators.
The recent Tax Appeal Commission Determination (108 TACD 2020) concerns the application of the close service company surcharge to a company (‘the firm’) carrying on an accountancy practice.
The case centred on whether the principal part of the firm’s income was derived from professional or non-professional services.
Read more…

Domicile: what does it mean?

It is mandatory for taxpayers to include details of their residence, ordinary residence and domicile status as part of their personal details when filing their annual income tax return. The requirement to return domicile status was introduced in 2017. A taxpayer’s domicile can be a determining factor in whether an individual is liable to Irish taxes such as income tax, capital gains tax and capital acquisitions tax.
Mark and John examine the concept of domicile and relevant case law on the matter and write about how an individual can determine their domicile status in their feature article.

Amanda-Jayne Comyn joins the firm

Amanda-Jayne Comyn has joined the team at Circulo Tax Advisors. Amanda is a Barrister-at-law and a Chartered Tax Advisor (CTA).  She has extensive experience in the field of tax having worked in leading legal firms and large accountancy practices, mostly recently as a tax partner with Philip Lee and prior to that as tax director with Grant Thornton.

Principal Private Residence relief

Mark and John write on the decision from the Tax Appeals Commission (TAC) on principal private residence relief. Of particular interest in this appeal is the quantum and sources of evidence provided by Revenue in support of its position and the analysis by the TAC in reaching its decision to deny the relief. The detail of the submissions presented by Revenue in this case provide careful food for thought and identify the key areas that should be considered. It is clear that Revenue are taking keen interest in claims for PPR relief given the generous nature the relief.

Read the article which featured in the January 2019 issue of tax.point.

Job Vacancy

Tax Manager
Circulo are an ambitious boutique tax practise providing innovative tax solutions and advise to clients. Due to our continued growth and future plans we are currently seeking a tax manager. This is an excellent opportunity for the right person to develop their career through expanding their technical knowledge and opportunities for promotion.

Job Role
• Researching and presenting on technical tax matters to support our tax advisory services
• Corresponding with clients, Revenue and intermediaries on all aspects of the client’s affairs
• Project managing tax assignments to provide an excellent service to our growing client base of corporate and high net worth individuals.
• Contributing to the development and growth of the practise.

• ACA/ ACCA qualified
• Tax qualified with a minimum of 1 year’s post qualification experience
• Strong technical knowledge with an emphasis on capital taxes
• Strong organisational and communication skills
• Self-motivated and a keen interest in developing their technical knowledge and ability to communicate with clients and intermediaries

Apply: Please send your CV to us at

Budget 2018 Key Tax Measures

The Minister for Finance Paschal Donohoe delivered Budget 2018 on Tuesday 10 October. The key tax measures in Budget 2018 include the much publicised reductions in the tax burden for low and middle income earners and tweaks to other taxes, the big surprise was the 4 percent stamp duty increase on commercial transactions and the absence of any improvements to entrepreneurs relief and the gift and inheritance tax group thresholds.
If you would like a summary of the key tax measures, read below.
A reduction in the rates and an increase in the income threshold was announced as follows:
• €12,012 – €19,372 @ 2 percent
This is a reduction from 2.5 percent and the income threshold increased from €18,772.
• €19,372 – €70,044 @ 4.75 percent
This is a reduction in the rate from 5 percent.
The top rate for income from €70,045 remains at 8 percent. There was no change to the entry rate of 0.5 percent for income up to €12,012. The income exemption limit of €13,000 per year remains.
For the self-employed with income over €100,000, there was no change to the 3% surcharge.
Rate bands
The standard rate band will increase by €750. This means that the entry point to the 40% rate of income tax will be €34,550 for all single earners and €43,550 for married couples with one income earner.
This change from 1 January next will mean a tax reduction of €150 per year for individuals paying tax at the top rate.
Tax credits
The Earned Income Credit for the self-employed and proprietary directors will increase by €200 to €1,150 from 1 January 2018. The PAYE credit remains at €1,650.
The Home Carer Credit will increase by €100 to bring it up to €1,200 from 1 January next.
Mortgage Interest Relief
For owner occupiers who took out qualifying mortgages between 2004 and 2012, mortgage interest relief was expected to end on 31 December 2017. The Minister announced an extension to the relief for these homeowners until 2020. The relief available in 2017 will be restricted to 75% in 2018, 50% in 2019 and 25% in 2020. The relief will cease in 2021.
Employee motor vehicle
In an effort to tackle climate change a new 0 percent BIK rate on electric motor vehicles provided in the workplace will be in place for one year. A review on the general BIK system for motor vehicles was indicated.
Share based incentive
A new share-based remuneration incentive called the Key Employee Engagement Programme or “KEEP” is to be introduced from 1 January next which will aim to assist unquoted SME companies to attract and retain employees. According to the Budget documents, the employee will be subject to capital gains tax on the disposal of the shares in place of the current income tax, USC and PRSI liabilities on exercise.
An increase in the National Training Fund Levy was announced. This is set to increase by 0.1% per annum over the next three years, bringing the Levy from 0.7% to 1%. This is an addition cost for employers as the levy is a component part of the Employer PRSI charge. Therefore, the employers’ PRSI will increase from the current rate of 10.75% to 11.05% by 2020.
A working group will be established to plan over the next year the amalgamation of PRSI and USC over the medium term.
Rental deduction for pre-letting expenses
To encourage supply in the residential rental sector, a new measure will allow pre-letting expenses otherwise not allowable, such as painting, minor repairs and cleaning, to be deducted against rental income. In order to qualify, the property has to have been vacant for at least 12 months; expenses have to be revenue in nature and cannot exceed €5,000 per property. If the property is taken off the rental market within four years, any relief given will be clawed back. The relief is to be available for expenditure incurred up to the end of 2021.
Capital gains tax (CGT)
It was disappointing that there were no improvements announced to entrepreneurs’ relief, particularly an increase to the lifetime threshold limit of €1 million.
The seven year CGT relief is to be amended to allow the owners of qualifying land or buildings to sell those assets between the fourth and seventh anniversaries of their acquisition and still enjoy relief from CGT on chargeable gains.
Capital acquisitions tax (CAT)
Agricultural land placed under solar infrastructure will continue to be classified as agricultural land (formerly it would no-longer have been deemed agricultural land), but with a condition restricting the amount of the farmland that can be used for solar infrastructure to 50 percent of the total farm acreage. This will apply for the purposes of both CAT agricultural relief and CGT retirement relief
Stamp duty reliefs
Stamp duty relief for inter-family farm transfers is extended for a further three years. This relief applies to transfers of farm land by specific individuals.
Tax relief for intangible assets
The deduction for capital allowances for intangible assets, and any related interest expense, will be limited to 80 percent of the relevant income arising from the intangible asset in an accounting period. This seems to be a return to the old regime pre Finance Act 2014.
Accelerated Capital Allowances for energy-efficient equipment
This is an incentive to encourage investment in energy efficient equipment for use in a company’s trade. The scheme was due to expire by 31 December 2017 but will now continue until the end of 2020.
Stamp duty
The rate of stamp duty on non-residential property increased from 2 percent to 6 percent with effect from midnight on Budget night. The rate was as high as 9 percent between 2002 and 2008.
No change was announced to the second reduced rate of VAT of 9% which mainly applies to the tourism and hospitality sectors.
Charities are exempt from VAT under the EU VAT Directive and as a result cannot recover VAT incurred on goods and services that they purchase. Around €5 million is being made available to a Charities VAT Compensation Scheme in 2019. The scheme is set enable charities claim a refund of a proportion of their 2018 VAT costs, based on the level of non-public funding they receive.
A sugar sweetened drinks (SSD) tax is due to be introduced next April. The tax will be either 20c or 30c per litre on drinks with a sugar content beginning at over 5 grams per 100 millilitres.
The tax looks similar to the regime to be introduced in the UK, also from 1 April next. The sugar tax will be at a rate of 30 cent per litre on non-alcoholic, water based and juice based drinks which have 8 grams and above of sugar per 100 millilitres. A reduced rate of 20 cent per litre will apply on such drinks with between 5 and 8 grams of sugar per 100 millilitres.
Brexit loan scheme
To support SMEs to trade beyond the UK and enter new markets a Brexit Loan Scheme of over €300 million will be made available at competitive rates to businesses to sustain short term working capital needs. The Minister highlighted that this scheme will be available to food businesses given their unique exposure to the UK market.
Finance Bill 2017
The Finance Bill which will legislate for the Budget measures and will also likely include additional measures will be published on 19 October. According to the Department of Finance timetable, the Bill will move to debate at Committee Stage on 7 November and is due at Report Stage on 21 November. The Bill is expected to pass to the Seanad on 28 November.

Entrepreneurs relief, retirement relief and dwelling house exemption

Paula presented on the CGT entrepreneurs relief, retirement relief and the CAT dwelling house exemption for Chartered Accountants Ireland in September 2017. Her presentation is Entreprenuers relief for you to read. If you have any queries on Paula’s presentation please contact us.