Capital Acquisitions Tax (CAT) arises on the gift or inheritance of an asset. Once the taxable value of a gift or inheritance is determined, the amount of CAT to be paid varies depending on the relationship between the beneficiary and the person who provided the gift or inheritance (disponer). The gift/inheritance is valued for CAT purposes on the date the beneficiary becomes entitled to it. The total amount of the gift/inheritance taxable is the market value minus deductions such as funeral expenses (in the case of an inheritance), legal costs or any debts which must be paid by law.
The level of CAT owed to the revenue will depend on the relationship between the disponer and the beneficiary. Any gift or inheritance received that exceeds the beneficiary’s group tax exemption threshold is charged 33% CAT. The beneficiary of the gift/inheritance is responsible for ensuring that any CAT owed is paid by the applicable pay and file date in accordance with Revenue rules. If you are not a resident in Ireland then you must appoint a third party, such as a solicitor to take responsibility for the payment of CAT to the Revenue.
|Group||2019 CAT Threshold|
|Group A – Son/Daughter (including step child or adopted child), Parents, in cases of inheritance of disponer.||€320,000.00|
|Group B – Brother/Sister, Niece/Nephew, Parent, Grandchild/Great Grand Child of disponer.||€32,500.00|
|Group C – Any relationship to disponer not included in Group A or Group B||€16,250.00|
Within Irish law there are certain exemptions from paying CAT exist including:
- Gifts or inheritances between spouses.
- The first €3,000 of taxable gifts from one individual to another in a calendar year.
- Gift or inheritance of a dwelling house which is your main residence (subject to certain conditions).
- Benefits received for charitable purposes.
- Benefits used solely for medical expenses for a permanently incapacitated person due to physical or mental illness.
If certain requirements are met regarding the gift or inheritance of a business or agricultural benefit a CAT tax relief may apply
- Business Relief – applies to gift or inheritance of business property where certain conditions are met. Business relief reduces taxable value of business property by up to 90%.
- Agriculture Relief – If the gift/inheritance consists of agriculture property such as land or machinery a 90% reduction in the taxable value of the benefit may be applied providing certain conditions are met.