Entrepreneur Relief

[bravotwozer0]

Evening - query is two fold.
1) Can I qualify for Entrepreneur Relief with a 6% shareholding - director of the company 10 years plus now and in employment 20 years with co.

2) As I have a minority shareholding, when the time comes to retire its a condition of my share contract that the company purchases the shares from me. As its a minority shareholding is it automatically / usually the case that the value of the shares would be discounted down and if so is there are formulae for this discounting or a "norm". I have checked my shareholding contract and there is no mention of a discounted rate being applied but also no mention of the criteria for valuation, just simply that should a value not be agreed between the two parties to that an independent would be appointed.
The business current OMV would be circa €14M which has increased very considerably since I obtained my shareholding.

Any other advice around what I should be looking at or getting in place before I begin the process would be appreciated

 

[cally1990]

Entrepreneur Relief allows gains on qualifying assets to be taxed at only 10%. To qualify for this relief, you must hold a minimum of 5% of the company's shares for a continuous three-year period prior to selling.

Regarding the valuation of minority shareholdings, there aren't fixed formulae but guidelines exist. Generally, a discount is applied due to the lack of control and marketability. For shareholdings up to 25%, a discount range of 50% – 70% is suggested if no dividends are paid; for those between 25% to 50%, a 35% – 40% discount might be applied. The exact discount rate would take into account the specifics of the shares and any additional rights they confer.

Given you meet the shareholding criterion, you could qualify for Entrepreneur Relief. For the valuation of your shares, while there's no set formula, generally recognized discounts for minority interests can be referenced for negotiation or independent valuation.

 

[1eyeonthefuture]

Entrepreneur Relief allows gains on qualifying assets to be taxed at only 10%. To qualify for this relief, you must hold a minimum of 5% of the company's shares for a continuous three-year period prior to selling.

Regarding the valuation of minority shareholdings, there aren't fixed formulae but guidelines exist. Generally, a discount is applied due to the lack of control and marketability. For shareholdings up to 25%, a discount range of 50% – 70% is suggested if no dividends are paid; for those between 25% to 50%, a 35% – 40% discount might be applied. The exact discount rate would take into account the specifics of the shares and any additional rights they confer.

Given you meet the shareholding criterion, you could qualify for Entrepreneur Relief. For the valuation of your shares, while there's no set formula, generally recognized discounts for minority interests can be referenced for negotiation or independent valuation.

@cally1990 In this situation would a reduction factor apply here if the OP's company was to be sold?