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Understanding Capital Acquisitions Tax (CAT) in Ireland: A Complete Guide

If you’ve ever received a gift or inheritance in Ireland, you might be familiar with CAT, or Capital Acquisitions Tax. It’s crucial for anyone dealing with personal finance in Ireland to understand how CAT works, ensuring compliance with tax regulations and making informed financial decisions. This guide covers everything you need to know about CAT, including thresholds, exemptions, and how to calculate and pay this tax.

What is Capital Acquisitions Tax (CAT)?

Capital Acquisitions Tax is a tax on gifts and inheritances. If you receive a significant gift or inheritance, you may be required to pay CAT. However, thresholds are in place, allowing you to receive gifts or inheritances up to a certain value over your lifetime before CAT applies.

Who’s Involved?

  • Disponer: The person who gives the gift or inheritance.
  • Beneficiary: That’s you—the person receiving the gift or inheritance.

Tax-Free Thresholds

The amount of CAT payable depends on your relationship with the disponer and the value of the gift or inheritance. There are three relationship groups:

  • Group A (Child): €335,000
  • Group B (Lineal ancestor/descendant, sibling, or child of a sibling): €32,500
  • Group C (All other “strangers in blood”): €16,250

An annual gift exemption of €3,000 applies, allowing for smaller gifts without triggering CAT.

What’s Taxed and What’s Not?

Generally, CAT applies to items like cash, property, and stocks. Exceptions include gifts from spouses or civil partners and gifts below the relevant group threshold. The popular “Small Gift Exemption” lets you receive multiple €3,000 gifts tax-free from different individuals each year.

Calculating CAT

To calculate CAT, know the gift’s or inheritance’s value, your relationship with the disponer, and any previous gifts or inheritances received within the same threshold since December 5, 1991. You pay tax only on amounts exceeding the tax-free threshold for your group.

How to Pay CAT

You can pay CAT online using debit or credit cards, or via Electronic Funds Transfer. Deadlines for payment depend on the valuation date but generally fall by October 31st of the relevant year.

Conclusion

Navigating Capital Acquisitions Tax in Ireland may seem daunting, but understanding the thresholds, exemptions, and payment methods can smooth the process. For further information, consider consulting the Revenue Commissioners’ official guidelines or seeking advice from a financial advisor.

Ezfees Financial Ltd T/A ezfees financial is regulated by the Central Bank of Ireland. Reg no 489026

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