Gift & Inheritance Tax

Gift tax is charged on taxable gifts taken on or after 28 February, 1974, and Inheritance Tax is charged on taxable inheritances taken on or after 1 April, 1975. An inheritance is a gratuitous benefit taken on a death and a gift is a gratuitous benefit taken otherwise than on a death.

The tax is charged on the taxable value of the gift or inheritance. The taxable value is arrived at by deducting from the market value of the property comprised in the gift or inheritance permissible debts and incumbrances and any consideration paid by the beneficiary.

Once the taxable value of the gift or inheritance has been determined the amount of tax payable will depend on whether the appropriate tax-free threshold has been exceeded. The rates of tax are as follows-

The threshold amount - Nil

Excess 25%*

*This rate was introduced on 8 April 2009.

Previous rates:

22% for gifts and inheritances taken between 20/11/08 – 07/04/09 inclusive

20% for gifts and inheritances taken prior to 20/11/08

(See Indexed Thresholds Table below for calculation of Gift Tax & Inheritance Tax, exemptions etc.)

Indexed Thresholds for Capital Acquisitions Tax – 2009

For the purpose of Gift and Inheritance Tax, the relationship between the person who provided the gift or inheritance (i.e. the Disponer) and the person who received the gift or inheritance (i.e. the beneficiary), determines the maximum tax free threshold - known as the "group threshold".

The indexed Group thresholds for 2008 and 2009 are set out in the table below

*In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold.

Gifts or inheritances of Irish property are liable to tax whether or not the disponer is resident or domiciled in Ireland. Foreign property is liable to tax where either the disponer or the beneficiary is resident or ordinarily resident in Ireland at the relevant date.

Various exemptions from gift and Inheritance Tax have been provided for. For example, the first €3,000 taken as a gift by a beneficiary from a disponer in any one year is exempt from tax as are gifts and inheritances taken by one spouse from the other. There are exemptions in favour of certain charities, heritage property, superannuation benefits, and foreign donees of certain Irish government securities. Qualifying insurance policies to the extent that they are utilised in the payment of certain Gift Tax or Inheritance Tax are also exempt. A dwelling house taken as a gift or inheritance is exempt in certain circumstances.

Please go to www.revenue.ie for further details