Practitioners and tax advisers will be aware of the requirement to obtain a CGT clearance certificate, a Form CG50A, in the case of a disposal of certain assets where the consideration exceeds €500,000 (or €1million for residential property). Generally, where a Form CG50A is required but is not obtained, the purchaser must withhold 15% of the consideration and pay this to the Revenue Commissioners.

The assets for which a Form CG50A is required generally include:

(a) Land in the State;

(b) Minerals in the State or any rights, interests or other assets in relation to mining or minerals or the searching for minerals;

(c) Exploration or exploitation rights in a designated area;

(d) Shares in a company deriving their value or the greater part of their value directly or indirectly from assets specified in (a), (b) or (c) other than shares quoted on a stock exchange;

(e) Shares received in exchange for shares specified at (d); and

(f) Goodwill of a trade carried on in the State.

The Form CG50A is typically obtained by the Vendor (or the Vendor’s tax adviser on their behalf) applying on ROS using the “eCG50” process (see details of this process below) at least 5 business days before the intended closing date. A copy of the contract for disposal should accompany the application. Revenue continue to accept paper format applications for a Form CG50A but we note that at the time of issue of this Practice Note, the turnaround time is approximately 10 business days.

A Form CG50A will be issued where:

(a)  The vendor is resident in Ireland;

(b) There is no capital gains tax due on the particular disposal; or

(c) The capital gains tax payable on the disposal and on any gain accruing in an earlier year on a previous disposal of the asset has been paid.

eCG50 Process

Since June 2020, a system for the online processing of the CG50A is available which can be carried out via the ROS Online. Tax practitioners should ensure they are registered as a TAIN advisor as soon as possible in order to apply for an eCG50. Registration takes approximately 24 hours and can be completed on the homepage of ROS Online by going to ‘Manage Tax Registrations’ and adding this service.

Registration as a TAIN advisor, and more information about the application for the eCG50A, can be found in the Revenue’s ‘eCG50 - Guide for Applicants’ [link].

Particular rules for certain circumstances

The current practice of the Revenue Commissioners provides for particular rules in certain situations as set out in general terms below. Practitioners are advised to consult the current published practice of the Revenue Commissioners at www.revenue.ie for further information.

1. Vendor is a builder/developer and is disposing of newly constructed house

Production of any of the following will suffice instead of a Form CG50A:

• A copy of a current notification of determination issued to the vendor under section 531 TCA 1997 indicating a 0% rate;
• A copy of a current tax clearance certificate issued to the vendor under section 1094 or 1095 of the TCA 1997; or
• A copy of a current tax clearance certificate issued to the vendor specifically for the purposes of section 980 TCA 1997.

2. Purchase in trust

Circumstances can arise where a purchaser does not want to reveal its identity to a vendor or where this may not have been finally decided, e.g. in the context of a group of companies. The inclusion of ‘in trust’ details for the purchase on the application form will not prevent the issue of a Form CG50A.

The purchaser’s agent solicitor must, however, furnish the name and address of the purchaser to the Revenue Commissioners immediately on the closing of the sale.

3. Simultaneous signing and closing of contracts.

Where there is a situation of simultaneous signing and closing of contracts, the published practice of the Revenue Commissioners requires that the unsigned contract plus a letter of undertaking from the solicitor that signed copies of the contract will be submitted within 2 weeks be included in the application for a Form CG50A. Solicitors should ensure that they have their clients’ authority to provide such an undertaking and that they are capable of complying with the terms of such undertaking before providing an undertaking to the Revenue Commissioners. Solicitors may wish to consider qualifying the relevant undertaking if necessary.  

4. Disposals where there is no contract

This can occur in certain situations, for example on the redemption of shares. A note confirming the reasons the application is not accompanied by a contract should be provided to Revenue with the application for a Form CG50A. The absence of a contract should not, of itself, prevent the issue of a Form CG50A in such situations.

5. Consideration payable by instalments

Where consideration is payable in instalments, the general position is that a Form CG50A should be sought at the outset for the maximum amount of the consideration that is provided for in the contract, notwithstanding that the initial payment might not exceed the threshold.

If there are doubts as to the quantum of the final amount of the consideration – for example, where there is contingent consideration – the applicant should be asked to quantify the final amount to the best of their ability, and the application should be made on that basis. Any quantification for this purpose will not affect the ultimate liability of the parties to tax, including in particular to CGT.

6. Disposal where reliefs apply (for example, section 615/617 TCA apply)

Notwithstanding the fact that there may be no capital gains tax payable due to reliefs available under the legislation, CGT certificates will still be required as normal where the value of consideration paid (or deemed to have been paid) is in excess of the relevant threshold, except where legislation specifically deems no disposal to have occurred.

7. Disposals by partners in a partnership

Where the total consideration on disposal of a partnership asset exceeds the relevant threshold, one application is made on behalf of the partnership. The application should list the names of the partners and their PPS numbers. This one certificate suffices for presentation to the purchaser to enable him or her to pay gross, even if the payment is divided, with amounts going to individual partners.

8. Disposals by co-ownerships (e.g. joint tenants or tenants in common)

On the disposal of an asset by a co-ownership, each co-owner only needs a certificate to the extent that his or her share of the consideration is greater than the relevant threshold. Documentation should accompany the application for a Form CG50A, explaining that a certificate is being sought in respect of the applicant’s share of a larger asset and that a co-ownership rather than a partnership is involved.

9. Disposals by bodies which have the benefit of an exemption from CGT

The provisions of section 980 do not apply to a disposal of an asset by a person where any gain accruing on the disposal would not be a chargeable gain. Examples of such disposals would include:

• A disposal by a pension fund or arrangement carrying an exemption from CGT pursuant to section 608(2) or (2A) of the TCA;
• A disposal by an investment undertaking within section 739C of the TCA;
• A disposal by a charity to which section 609(1) of the TCA is applicable;
• A disposal by the National Asset Management Agency (NAMA) or by any other body specified in Schedule 15 to the TCA; and
• A disposal by a REIT or a member of a group REIT to which section 705G(1)(b) of the TCA is applicable.