Capital Taxes

Capital Gains Tax

The Irish system of capital gains tax, is broadly similar to that in the United Kingdom. However, the annual tax allowances are relatively small.

Chargeable assets are those subject to capital gains tax. Losses on chargeable assets may be offset against gains. Chargeable assets include most assets such as real property, stocks, shares,  goodwill, debts (other than the hands of the original creditor) and non-euro currencies.

Certain assets are not chargeable,  principally because they are wasting assets. They include chattels which have a life of less than 50 years certain government and fixed interest securities.

There is an exemption for the principal private residence for so long as the taxpayer resides there. If the taxpayer has resided there for part of his period of ownership only, the exemption is prorated to the periods when he resided there. There is an exemption from this rule  where the period abroad is due to being required to work abroad by reason of the duties of an employment or office.

Basis of CGT Charge

A person who is domiciled in Ireland and either resident or ordinarily resident in Ireland, is liable to capital gains on all his gains worldwide. The disposal of real property, land and certain mineral rights in Ireland is subject to Irish capital gains tax, irrespective of the residence of the person making the disposal.

A person who is not domiciled but is either resident or ordinarily resident in Ireland, is liable for capital gains tax on the gains arising on the disposal of chargeable assets outside Ireland to the extent only that the proceeds are remitted into Ireland. Remittances from abroad from pre-residence capital rather than from gains or income, is not subject to tax. No non-domiciled the levy is payable for remittance treatment.

Values costs and sums in a foreign currency are translated into euro on the relevant date e.g. the date of disposal or the date when expenses et cetera are incurred.

Losses outside Ireland which would not be subject to capital gains, tax cannot be used to offset gains even if the proceed are remitted into Ireland.

Irish Gift and Inheritance Tax

The Irish system of inheritance tax applies both to gifts and inheritances. It is significantly different from the UK tax. Capital acquisitions tax refers collectively to gift tax and inheritance tax. They are effectively the same tax

The position is considered from the perspective of the recipient rather than that of the donor or the estate. This differs significantly to the basis of charge in the United Kingdom and the United States.

Capital acquisitions tax applies to assets passing on death and to lifetime gifts. Where the deceased or donor or the recipient is resident or ordinarily resident in Ireland (regardless of domicile), Irish capital acquisitions tax applies. Irish capital acquisitions tax applies to assets situate in Ireland irrespective of the residence or ordinary residence of the donor or deceased or recipient.

Domicile is no longer the principal test for liability.  Residence is now the principal test. However, there is an important limit to the charge available to non-domiciles residents in their first five years,This does not limit the charge in respect of Irish situate assets.

A person who is not domiciled, is not deemed resident or ordinarily resident in Ireland for the purposes of capital acquisitions tax, unless he is either resident or ordinarily resident in Ireland on the date of the gift or inheritance and he has been resident in Ireland for the five consecutive tax years immediately before the tax in year which the gift or inheritance  is made or arises.