CGT3 - Roll-over Relief for Individuals on disposal of certain Shares
Please note that this relief has been discontinued for disposals after 3/12/2002.
Introduction
Employees or directors can, in certain circumstances, defer ("roll-over") the payment of Capital Gains Tax (CGT) liabilities arising on the disposal of shares. Payment of CGT can be rolled-over where the proceeds from the disposal of shares are re-invested in an unquoted trading company within 3 years of the date of disposal.
Payment of CGT on the gain is rolled-over until the new shares are, in turn, sold.
This roll-over relief is provided for under Section 591 Taxes Consolidation Act 1997.
Who can claim relief?
If you have been a full-time or part-time director or employee of a trading company for the three years prior to the disposal of shares in that company ('the original holding') you can claim the relief. The trading company must have been trading throughout the 3 year period prior to the disposal of the shares, or from the date the company commenced to trade, if shorter.
Relief is also available on the disposal of shares in a holding company. A holding company is one whose business consists of the holding of shares in trading companies in which it owns at least 75% of the ordinary shares.
Re-investment
To roll-over the liability to CGT on the disposal of the original holding, you must re-invest the proceeds of the sale in a qualifying company.
The qualifying company must:
- be a company which is not quoted on and stock market and which is resident and incorporated in the State,
- not be under the control of another company,
- exist wholly for the purposes of carrying on a trade or profession in the State - other than dealing in shares, securities, land, currencies, futures or traded options.
The following conditions on re-investment also apply. You must:
- re-invest the proceeds of the original holding, within 3 years of the disposal, in new ordinary shares in a qualifying company. The shares must not carry present or future preferential rights for 5 years.
- hold at least 5% of the ordinary share capital of the new company within 1 year of the date of disposal of the original holding,
- hold at least 15% of the ordinary share capital of the new company within 3 years of the date of disposal of the original holding,
- reinvest in a company other than that in which the original holding was held,
- become a full-time employee or full-time director of the company within 1 year of the disposal of the original holding and remain so throughout the period ending 3 years after that disposal.
The money raised from the share issue must be used for trading or professional activities.
Where you do not satisfy conditions 2 and/or 5 outlined above you can still claim the relief if:
- the other three conditions for granting the relief have been satisfied,
- the CGT on the disposal of the original holding has been paid in full, and
- you commence full-time employment or directorship of the company in which the re-investment is made at any time within 3 years of disposing of the shares in the original company and remain in that employment for 2 years.
When this last condition is satisfied, the CGT paid will be refunded without interest. Any claim to a refund should be made to the Revenue office that deals with your tax returns.
Nature of the relief
Where all the conditions are met, CGT on the disposal of the original holding is deferred until the new investment is disposed of.
The gain can be deferred again where the proceeds from the new investment are re-invested in a further qualifying company.
Partial relief
Partial relief may also be available where the entire proceeds of the original holding are not re-invested.
How can relief be claimed?
Relief can be claimed by writing to your tax office once the re-investment in a qualifying company is made. It is not necessary to wait 3 years from the date of disposal of the original holding to show that the conditions regarding re-investment have been met.
Withdrawal of Relief
Where any of the conditions cease to be met the relief will be withdrawn. Details of the event giving rise to the withdrawal of relief must be included in your tax return when this happens.
Anti-Avoidance
Relief will not be granted unless shares are purchased for bona fide commercial reasons and not for the purpose of realising a gain from a subsequent disposal.
Further Information
Further information on Capital Gains Tax in general is available in Revenue’s Leaflet 
CGT 1 "Guide to Capital Gains Tax" (PDF, 217KB) - which can be obtained from any Revenue office or from Revenue’s Forms and Leaflets Service by phoning Lo-Call 1890 30 67 06.
Roll-over Relief for Individuals on disposal of certain Shares (PDF, 92KB)
Re-issued 2003
