Capital Acquisitions Tax in Ireland: A Complete Guide
Receiving a gift or inheritance should be a moment to celebrate – but it’s important to understand how capital acquisitions tax might impact what you receive. Whether you’re inheriting property, managing an estate, or gifting assets, knowing the rules can save you money and avoid stress. CAT affects not only residents of Ireland but also non-residents with Irish assets. In this guide, we will explain everything you need to know to plan ahead and get the most out of your inheritance or gift.
Here’s a breakdown of all the areas we will cover:
• What is capital acquisition tax?
• Who pays capital acquisition tax?
• What are the three CAT Group thresholds in Ireland?
• How much money can you gift to a family member tax-free in Ireland?
• What are the key exemptions from capital acquisition tax?
• How is capital acquisition tax calculated?
• What happens if the assets are located abroad?
• How can Tax Return Plus help?
• FAQs
What is capital acquisition tax?
Capital Acquisitions Tax (CAT) is a tax in Ireland that applies when you receive a gift or inheritance. For example, if someone gives you money, property, or other valuable assets, you might have to pay CAT depending on how much the asset is worth and your relationship with the person who gave it to you.
Who pays capital acquisition tax?
The person who receives the gift or inheritance is responsible for paying capital acquisitions tax in Ireland. If you inherit property or are gifted money, it’s up to you—not the person giving it—to pay any tax owed. There are also tax reliefs and exemptions that can help. For example, you don’t have to pay CAT if you get a gift or inheritance from your spouse or civil partner. You can also receive up to €3,000 a year from the same person as a gift without it being taxed.
What are the three CAT Group thresholds In Ireland?
The capital acquisitions tax you pay depends on how close you are to the person giving the gift or inheritance and on the aggregate gifts/inheritance in each threshold. There are three groups, called CAT Threshold Groups, each with a tax-free limit. These thresholds were recently updated in the Budget 2025.
Let’s take a closer look at the three threshold groups.
– Group A
This group applies to children inheriting from their parents, whether they are biological, adopted, foster, or stepchildren. The tax-free threshold for Group A is the highest. The 2025 Budget has increased the Group A threshold from €335,000 to €400,000, which means a child can receive up to €400,000 from a parent without being taxed under CAT. If a gift or inheritance goes over the group threshold, it will be taxed at 33%.
– Group B
Group B includes siblings, nieces, nephews, grandchildren, and other relatives who are not as closely related as those in Group A. Also, if a grandchild is under 18 and receives a gift or inheritance from a grandparent, Group A might apply if the grandchild’s parent has passed away. The Group B threshold has increased from €32,500 to €40,000.
– Group C
Group C is for everyone else, such as friends, distant relatives, or non-relatives. The Group C threshold has increased from €16,250 to €20,000. This increase provides some relief for people receiving gifts or inheritances from those who aren’t in their immediate family.
How much money can you gift to a family member tax-free In Ireland?
In Ireland, there is a €3,000 small gift exemption, allowing you to gift up to €3,000 per year to any individual without paying capital acquisition tax. This exemption is particularly useful for families who want to make smaller financial gifts without worrying about taxes.
What are the key exemptions from capital acquisitions tax?
When you receive a gift or inheritance from your spouse or civil partner, it is completely exempt from CAT, regardless of the value.
How is capital acquisitions tax calculated?
Calculating Capital Acquisitions Tax in Ireland is a straightforward process.
Let’s break it down into four steps.
- Determine the value of the gift or inheritance: Figure out the total value of the gift or inheritance you’ve received. This could include money, property, or other assets.
- Apply the relevant threshold: Depending on your relationship with the person giving the gift, you belong to one of three groups (A, B, or C), and each group has its own tax-free limit. For example, Group A (a child inheriting from parents) has a threshold of €400,000 (as per Budget 2025).
- Subtract the threshold from the value: Once you know your group’s threshold, subtract it from the total value of the gift or inheritance. The amount left over is what will be taxed under CAT.
- Apply the CAT rate: Any amount above the threshold is taxed at a rate of 33%, which is the standard CAT rate in Ireland.
Example:
Let’s say you inherit €450,000 from your parents and you are in Group A.
- The Group A threshold is now €400,000.
- Subtract €400,000 from €450,000.
- This leaves €50,000 to be taxed.
- Now, apply the 33% CAT rate to €50,000.
- €50,000 x 33% = €16,500.
As a result, you would owe €16,500 in CAT.
Not sure how much CAT you owe?
We can help.
What happens if the assets are located abroad?
If the assets are located abroad, you could still be charged capital acquisitions tax in Ireland. To avoid being taxed twice on the same inheritance or gift, Ireland has double taxation agreements with certain countries. These agreements prevent you from paying tax both in Ireland and in the country where the asset is located. For example, if you inherit property in the UK and pay inheritance tax there, Ireland’s agreement with the UK may allow you to reduce or avoid paying CAT on the same asset.
How can Tax Return Plus help?
Confused about capital acquisitions tax and how it applies to your inheritance or gift? Tax Return Plus is here to help! Our team of experts simplifies the process, providing clear, personalised advice so you can fully understand your tax responsibilities. Whether you’re dealing with assets in Ireland or abroad, we’ll guide you through every step and help you minimise your tax liability. Contact us today!
FAQs about Capital Acquisitions Tax
What is the IT38 form?
IT38 is the online form for filing a Capital Acquisitions Tax return. You need to file it if the value of gifts or inheritances exceeds 70% of the threshold.
What are the deadlines for CAT submissions?
The valuation date is when the value of the assets is established, and it determines the pay and file deadline for your CAT return. If the valuation date is between 1 January and 31 August, the deadline to pay and file is 31 October of the same year. If the valuation date is between 1 September and 31 December, the deadline is 31 October of the following year.
Can I appeal a CAT assessment?
Yes, you can appeal a CAT assessment if you disagree with the amount calculated. Appeals must be submitted to the Revenue Commissioners within 30 days of receiving the assessment.