Tax considerations on transfer of a business to next generation

Brian Harty, tax consultant, explains the main tax implications guiding a family business as it considers its succession strategy

Capital Acquisitions Tax (CAT) is the tax a beneficiary pays on the gift/inheritance of assets. A child can receive up to €335,000 tax-free lifetime gifts/inheritances from parents, whereas gifts from siblings, aunts, uncles, and grandparents is €32,500. Gifts from all other parties are liable to CAT above a lifetime tax-free threshold of €16,250. Picture: iStock

Succession planning is a process that involves careful consideration of all the issues when an owner decides to pass on their family business.

 For the succession planning to be effective, it is important that all parties in the transfer are involved, and that both tax and legal advice is sought as part of the planning process.