A section 85 agreement in Ireland is an important legal document that outlines the transfer of assets between two companies, or between a company and an individual. This agreement is used to transfer assets, such as property, equipment, or intellectual property, from one party to another in a tax-efficient manner.
Section 85 of the Irish Tax Consolidation Act 1997 provides a framework for the transfer of assets without incurring a significant tax liability. This agreement allows the transfer of assets at their current market value, rather than their original purchase price, which can result in substantial tax savings.
To ensure a section 85 agreement is valid, it must be executed within two years of the transfer of the assets. Additionally, the assets transferred must be used for the same purpose as they were originally intended. Any deviation from this can result in the agreement being declared void by the Revenue Commissioners.
A section 85 agreement can be particularly useful in situations where a business is restructuring, and assets need to be transferred from one entity to another. For example, if a company is splitting into two separate entities, a section 85 agreement can facilitate the transfer of assets from one company to the other, without incurring a significant tax liability on the transfer.
It is important to note that a section 85 agreement must be carefully drafted and executed by legal professionals experienced in this area. Failure to do so can result in unexpected tax liabilities and additional legal costs.
In conclusion, a section 85 agreement in Ireland can be an effective tool for transferring assets between companies or individuals in a tax-efficient manner. However, it is important to seek professional legal advice to ensure the agreement is valid and executed correctly.
