You may be thinking that moving or retiring abroad could help you avoid Irish gift and inheritance tax. However, it’s not always that simple. Although several European countries have no conventional inheritance tax, Irish families relocating overseas can still remain within the Irish Capital Acquisitions Tax (CAT) net after leaving Ireland.
How are gifts & inheritances taxed in Ireland?
Capital Acquisitions Tax (CAT) applies when someone receives a gift or inheritance. The amount of tax payable depends on the relationship between the giver and the recipient.
- Children benefit from what is called the Group A thresholds, which allow them to inherit up to €400,000 tax-free.
- Grandchildren, on the other hand, have a much lower tax-free threshold of €40,000 so if significantly larger sums are involved, it
may be worth considering a move.
But what if I am NOT an Irish tax resident?
Unfortunately, Irish CAT can still follow you overseas if any of the three conditions exist:
- The person providing the benefit (e.g. parent) is an Irish resident or ordinarily resident.
- The person receiving the gift or inheritance (beneficiary) is an Irish resident or ordinarily resident.
- The assets being gifted or in the Will are Irish assets e.g. Irish houses, land etc.
What does ordinarily residence mean?
There is a departure tail. A person generally ceases to be ordinarily resident only after being a non-Irish tax resident for three consecutive tax years.
Which European countries do not have inheritance tax?
This table highlights some of the more popular European retirement countries which do not have inheritance tax:
| Country | Gift & Inheritance Tax? |
|---|---|
| Italy | Yes |
| Malta | No |
| Greece | Yes |
| Cyprus | No |
| Switzerland | Yes |
| Monaco | Yes |
| France | Yes |
| Spain | Yes |
| United Kingdom | Yes |
| Portugal | No |
Note: ‘No’ does not necessarily mean that transfers are fully tax-free: local stamp duty, transfer taxes or later capital gains taxes may still arise.
The Bottom Line
If you and the beneficiary are out of Ireland for more than 3 consecutive years and you are leaving them non-Irish assets, then you should be able to avoid Irish CAT.
However, proper planning is essential.
Moving abroad? Contact us for advice about your Irish tax position. Click here to book a consultation.
This information should be treated as a guide only. Contact us for tax advice tailored to your needs.
