Strategic Wealth Extraction for Business Owners’ Future
We’re proud to have contributed to The Business Post’s “Future of Finance 2025” report, where we reveal how one business owner saved nearly €1 million through strategic tax planning and wealth extraction. Our insights were also featured on the Business News website, highlighting the real impact of smart financial advice. To read the full report and see how these strategies could apply to your business, click here to download.
With the right advice, business owners can grow wealth and reduce their tax burden. In our client’s scenario below, we believe seeking our advice was worth €904,000, as it generated €460,000 in additional pension growth and €444,000 in tax savings (including Income Tax, Capital Gains Tax, and Corporation Tax).
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Power of Financial Advice
“Time is money” is a common statement, however, the reality is that today smart strategy can drive real results, making expert financial advice essential.
According to the 2023 Value of Advice Report by Brokers Ireland:
- Individuals who received financial advice had 60% more in savings and investments (€71,332 vs. €44,754).
- Their pension pots were 55% larger with financial advice, which could mean having €1,300,000 compared to €840,000, a difference of €460,000.
- 58% of those who received advice felt more confident and in control of their finances.
Tax-Efficient Wealth Extraction
Taking money from your business isn’t as simple as a salary or dividend, these methods often come with high tax costs.
- Salary: Subject to Income Tax, PRSI and USC, totalling up to 52%.
- Dividends: Taxed up to 52%, including PRSI and USC.
- Company assets for personal use: Using company funds to purchase a car for personal use for example, can trigger Benefit-in-Kind (BIK) and charge of up to 30%.
More efficient options include:
- Pension Contributions: A company can contribute to a pension with no PRSI, USC, or BIK. Pension grows tax-free, and contributions are tax deductible. You can withdraw 25% as a tax-free lump sum when you retire. Since 1 January 2025, PRSA contributions are capped based on salary.
- Hiring Family Members: You can employ your spouse or adult child and lower your tax bill, with their salary and pension contributions reducing Corporation Tax.
Employment Investment Incentive Scheme (EIIS): This benefits companies by offering up to 40% tax relief on investments in qualifying Irish businesses, up to €250,000 (4 years) or €500,000 (7 years).
Exit Efficiently
If you consider stepping away from your business, having a strategic tax plan can reduce Capital Gains Tax through reliefs such as:
- Entrepreneur Relief: This relief can reduce Capital Gains Tax from 33% to 10% on the sale of qualifying business assets, up to a €1 million lifetime limit.
- Retirement Relief: You get full relief when selling at 55–65; after that, it’s capped at €3 million.
What This Looks Like in Real Life
Our client Tom runs a successful business, earning €100,000, with his spouse earning €75,000 as an employee of the business. Tom consulted us to structure the transaction in a tax-efficient manner prior to selling the company for €1.5 million.
We advised them to contribute 20% (max allowable by age) of their salaries to PRSAs, €20,000 for Tom and €15,000 for his spouse, resulting in €14,000 in annual income tax savings.
Additionally, their company paid 100% of their salaries as employer PRSA contributions, which resulted in annual Corporation Tax savings of almost €22,000. In addition, we helped them save €58,000 in Capital Gains Tax annually on the planned business sale. Combined, these created €80,000 in annual savings, totalling €240,000 over three years.
When Tom sold the business, he qualified for Entrepreneur Relief, reducing CGT on the first €1 million from 33% to 10%, resulting in a further saving of €230,000.
After taking our investment advice, Tom’s pension portfolio grew from €840,000 to €1.3 million, an increase of €460,000, in line with the 55% uplift shown in industry research.
In total, the strategy delivered €444,000 in tax savings and €460,000 in pension growth, €904,000 overall, highlighting the impact of timely, expert financial planning.
Building a business takes dedication, protecting its value takes smart planning. If you’re a business owner looking to grow your wealth, get a quote on www.truewealth.ie. With expert guidance from True Wealth, you can protect and maximise what you’ve worked so hard to build.
Disclaimer: “Tom” is a fictional client used for illustrative purposes only. The figures and outcomes shown are based on indicative scenarios and should not be taken as financial advice. Individual circumstances vary—please seek personalised advice from our financial advisors.
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We are experts in personal and business protection, savings and investments, pension tracing, personal and business owner financial planning, mortgages, and wealth management and extraction.
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