Capital Acquisitions Tax (CAT)

Capital Acquisitions Tax (CAT)

Capital Acquisitions Tax (CAT) is applicable to gifts or inheritances of assets.

The CAT amount depends on the relationship between the beneficiary (the individual receiving the gift or inheritance) and the disponer (the person providing the gift or inheritance). The valuation of the gift/inheritance for CAT purposes is determined on the date the beneficiary gains entitlement. The taxable amount of the gift/inheritance is the market value minus any permissible deductions, such as funeral expenses (in the case of inheritance), legal fees, or any debts that must be settled by law.

The CAT due to the revenue authority is contingent upon the relationship between the disponer and the beneficiary. Gifts or inheritances exceeding the beneficiary’s group tax exemption threshold are subject to CAT at the current rate of 33%. The tax exemption thresholds are as follows:

Group A– Son/Daughter (including stepchild or adopted child), Parents, in cases of inheritance from disponer.
€335,000

Group B – Brother/Sister, Niece/Nephew, Parent, Grandchild/Great Grandchild of disponer.
€32,500

Group C – Any relationship to disponer not included in Group A or Group B
€16,250

The beneficiary is responsible for ensuring that any owed CAT is paid and reported to Revenue by the specified deadline. If the beneficiary is a non-resident, they must appoint a third party, such as a solicitor or accountant, to be responsible for the CAT payment to the Revenue.

It is important to note that if the total value of gifts and inheritances surpasses 80% of the relevant group threshold for a beneficiary, they are required to file a CAT return (Form IT38), even if there is no CAT liability.

There are several exemptions from CAT, subject to certain conditions, which include:

• Gifts or inheritances between spouses.
• The first €3,000 of taxable gifts from one person to another in a calendar year.
• Payments for damages or compensation.
• Inheritance of a dwelling house serving as your primary residence, subject to specific conditions.
• Benefits designated for charitable objectives.
• Business Relief – applicable to gifts or inheritances of business assets.
• Agricultural Relief – relevant to gifts or inheritances comprising agricultural properties such as land or machinery.