Revenue provides clarification on their long standing concession concerning capital gains tax (CGT) relief and the transfer of bona fide trade creditors as part of the transfer of a business to a company. The concession applies to genuine trade creditors who supply goods or services to a business and not business debts such as bank loans or tax liabilities taken over by the company.

Generally relief is provided under section 600 TCA 1997 where a business, together with the whole of its assets, or the whole of its assets other than cash, is transferred to a company as a going concern wholly or partly in exchange for shares. A Revenue precedent, which can be read in full on TaxSource, provides that in certain circumstances, bona fide trade creditors will not be treated as other consideration for the transfer.

In their eBrief No. 111/14, Revenue clarify that “bona fide trade creditors” means genuine trade creditors who supply goods or services to a business. eBrief No. 111/14 can read on here.