Capital Acquisition Tax

Capital Acquisitions Tax, often entitled Inheritance or Gift Tax, will arise when a person receives a gift or inheritance from a person. Capital Acquisitions Tax arises at a rate of 33% on the value of the gift or inheritance in Ireland and the liability is payable by the recipient of the gift or inheritance.

In every case of a gift or inheritance there is a type of tax free allowance known as a "Threshold" available to the recipient. This amount is determined by means of the relationship between the person giving and the person receiving the gift or inheritance for example the highest threshold is available in the case of parent to child and the lowest is available in gifts or inheritances between stranger in blood i.e. the parties are not related.

In Ireland there are a number of relief’s available in relation to gifts or inheritances which may lead to a reduced, or indeed no, liability to Capital Acquisitions Tax. Some of the most common relief’s would include,

  1. Agricultural Relief, this relief applies to persons who are farmers and whose agricultural assets exceed 80% of their total asset base.
  2. Business Relief, this relief applies in the case of the receipt of a gift or inheritance of an on-going business.
  3. Small Gift Exemption, this applies only to gifts and an annual sum of €3,000 is receivable tax free.
  4. Dwelling House Exemption, applies where a person inherits or receives a house in which they have resided for a number of years and will continue to reside in as their only home.

All of the above relief’s are subject to strict requirements and the above merely outlines the situations in which they may become available if all requirements are satisfied.

Capital Acquisitions Tax may also apply in relation to a Trust. There are a number of different types of Trust for example, Discretionary Trust and Express Trust. This area is complicated and special rules apply in relation to it.

In relation to all gifts and inheritances all returns are due and tax is payable within four months of the date of the gift or inheritance. There is some leeway given in relation to the date of inheritance however the length of this will differ from case to case.


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