Capital Acquisitions Tax (CAT) is a term that taxpayers in Ireland may come into contact with at some stage. The CAT is a tax on gifts and inheritances we receive. Having knowledge on how CAT operates is crucial in making arrangements for finances and in regard to adhering to Irish tax law, tax legislation and be compliant.
Today, we are going to talk about the details of CAT in Ireland. We’ll cover what CAT is, who has to pay it, the various thresholds and rates, exemptions that apply, and how to calculate and file CAT. Whether you are making plans for your estate or are looking to inherit, it is important to have a good understanding of CAT. Read now to discover all you need to know about Capital Acquisition Tax in Ireland.
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What Is Capital Acquisition Tax?
Capital Acquisition Tax (CAT) in Ireland is a tax on gifts and inheritances. It is applicable when a person receives assets (money or property) by way of a gift or an inheritance. You are taxed on the value of the assets you receive. Usually, the rate of CAT is 33%, but this rate may change with the relation of the donor and recipient, for example, with blood relation. Recipients fall into one of three classes:
- Class A: Close family members, such as children or spouses, who receive the gift or inheritance.
- Class B: More distant relatives, like nieces, nephews, or siblings.
- Class C: Non-relatives, such as friends or distant acquaintances.
There are different tax-free thresholds depending on which class you are in. If no life event, then the recipient pays tax on the value over the threshold. For instance, Class A closely related family members receive the most immunity threshold.
Certain exemptions and reliefs are available, including agricultural relief or business relief, which can reduce the taxable value. Tax returns must be filed and any tax owed paid with the Revenue Commissioners.
CAT vs Capital Gains Tax (CGT) in Ireland
Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT) in Ireland are separate taxes with different triggers, thresholds, and liabilities. CAT applies to gifts and inheritances. CGT is a tax on the profit you earn when you sell, give away, or exchange an asset like property, shares, or other investments. Both CGT and CAT can be charged on the same property and event, and you may be able to get a credit for CGT paid in these situations.
Trigger Events:
CAT is triggered when someone receives a gift or inheritance. The liability depends on the relationship between the donor and recipient, as well as the tax-free thresholds. CGT kicks in when you make a profit from selling an asset, which includes property (except for Irish currency), shares, or other investments. The chargeable gain is usually the difference between the selling price and the acquisition cost, not the total amount.
Tax Rates and Thresholds:
CAT has a flat rate of 33% for amounts above certain thresholds, which vary depending on group classification (Group A, B, or C). CGT also has a standard rate of 33% on chargeable gains. However, CGT allows for deductions like acquisition costs, improvement costs, and certain reliefs, which lower the taxable gain. The thresholds and reliefs make the calculations for CAT and CGT quite different, even though they share the same nominal rate.
Overlapping Scenarios:
In situations where the same property is subject to both CAT and CGT, like when you receive a gifted property and later sell it, CGT applies to the chargeable gain from the sale, while CAT is applied to the gift. Taxpayers can claim a credit for CGT paid against their CAT liability. This prevents double taxation on the same economic gain.
Planning Considerations:
Planning for CAT usually involves arranging gifts or inheritances in a way that maximizes tax-free thresholds and uses available reliefs. In contrast, CGT planning focuses on the timing of asset sales, calculating acquisition costs, and using reliefs like Principal Private Residence (PPR) relief. Thoughtful planning can help minimize the impact of both taxes, especially when both may apply to the same property.
Both CAT and CGT aim to tax economic gains but do so in different contexts, inheritance versus disposal. Understanding how they interact, along with their thresholds, chargeable gains, and reliefs, helps taxpayers avoid surprises. Keep your records organized, track your gains, and plan ahead. Tax rules will not wait for you.
What Are The Key Exemptions From Capital Acquisition Tax?
Small Gift Exemption
Under the Small Gift Exemption, an individual may receive a gift up to the value of €3,000 from any person in any year without being subject to CAT. This exemption will be applicable for every donor, therefore you can actually receive up to €3,000 from several persons in a year without tax risk.
Agricultural Relief
Farmers can benefit from the use of Agricultural Relief to reduce their CAT value. That checks out if what is inherited or given is farmland. The recipient must farm the land for at least six years after it is transferred. This relief reduces up to 90% of his taxable value.
Business Relief
Business Relief gives a discount on the value of business assets, like a family business. This applies where the recipient continues to operate the business after acquiring the assets. This relief can decrease this value by as much as 90%, preserving family businesses.
Spouse Exemption
There is a full CAT exemption when spouses inherit property or assets. It also means that one spouse can pass transfers to the other, no matter how much they’re worth, without incurring any tax.
Dwelling House Exemption
If the land transfer involves a family home and the recipient is subject to certain conditions, they could be eligible for the Dwelling House Exemption. The recipient needs to have lived in the home for three years before the inheritance and must remain living there for six years after to qualify.
Charitable Exemption
Any gifts or inheritances made to registered charities are also fully exempt from CAT. Operation with Tax Due. There’s no tax payable on the asset received if the recipient is a charity.
Such exemptions can help lower the net effect of the CAT liability of the recipient. Expert tax services in Ireland can assist with applying these reliefs correctly
Capital Acquisitions Tax Planning Tips
Capital Acquisitions Tax (CAT) planning tips focus on minimizing tax on gifts, inheritances, and certain acquisitions by understanding CAT thresholds, reliefs, and exemptions, and using strategies like business or agricultural relief. Know what triggers CAT liability and what doesn’t, time and structure gifts strategically, and coordinate with He/She/It takes. Consulting a solicitor or tax advisor ensures proper planning. Smart CAT planning combines knowledge, timing, reliefs, and professional guidance to protect assets and reduce beneficiary tax efficiently. Many people also use income tax return services to stay compliant across taxes.
How Is Capital Acquisition Tax Calculated?
1. Value of the Gift or Inheritance
The first step in calculating Capital Acquisition Tax (CAT) is determining the value of the gift or inheritance. This includes the market value of the property or assets received, such as money, property, or shares.
2. Apply the Tax-Free Threshold
Each recipient has a tax-free threshold based on their relationship with the giver. There are three classes:
- Class A: Close family members (e.g., children, spouses) with a higher threshold.
- Class B: More distant relatives (e.g., siblings, nieces) with a lower threshold.
- Class C: Non-relatives (e.g., friends) with the lowest threshold.
If the value of the gift or inheritance exceeds the relevant threshold, the excess amount is taxable.
3. Deduct Exemptions and Reliefs
Exemptions and reliefs can reduce the taxable value:
-
- Small Gift Exemption: Gifts up to €3,000 per year per donor are exempt.
- Agricultural Relief: Reduces the value of agricultural property by up to 90%.
- Business Relief: Reduces the value of business assets by up to 90%.
- Spouse Exemption: No tax for spouses inheriting from each other.
- Dwelling House Exemption: If you inherit a family home and meet certain conditions, no tax is due.
4. Apply the Tax Rate
The current CAT rate is 33%. After deducting exemptions and applying the tax-free threshold, the taxable amount is subject to this rate.
For example, if the inheritance is worth €500,000, and the threshold for Class A is €320,000, the taxable value is €180,000 (€500,000 – €320,000). The CAT payable will be 33% of €180,000, which is €59,400.
5. File a Return
The recipient must file a CAT return with the Revenue Commissioners if the value exceeds the threshold. The tax due must also be paid within four months of the date of the gift or inheritance.
These steps outline how CAT is calculated, based on the value received, exemptions, and applicable thresholds.
6. How to Use a CAT Calculator
Use a CAT calculator to estimate exam scores or emulate the onscreen test tool with basic operations like addition, subtraction, multiplication, division, and square root. CATKing’s CAT Score Calculator and the CAT 2025 Score Calculator help predict percentiles and guide college planning. The emulation behaves similarly to the real exam calculator, though not perfectly. Enter raw marks, apply scaling, compare percentiles, and practice under timed conditions for better accuracy and smarter study decisions.
Capital Acquisitions Tax for Non-Residents
Capital Acquisitions Tax (CAT) for non-residents in Ireland applies when a non-resident receives a gift, inheritance, or certain discretionary trust distribution. CAT is an Irish tax that affects the beneficiary, and non-residents may need to pay through Electronic Fund Transfer (EFT) if they do not have a SEPA-reachable bank account.
CAT for non-residents makes sure Ireland taxes gifts and inheritances tied to Irish assets, even when they cross borders. Keep clear records, plan for payments, and understand thresholds. Ignorance can be costly, but being informed helps your inheritance go smoothly.
How do you declare and pay CAT in Ireland?
Declare CAT to the Revenue Commissioners
If you receive a gift or inheritance, you must notify the Irish Revenue Commissioners of the value of those assets if that value is above the relevant tax-free threshold. This is done by submitting a CAT Return (Form IT38). You can also use our tax returns support to make the filing easier.
When to File the CAT Return
Pay and file deadline: If the valuation date is between:
1 January and 31 August, you must file your return and pay by 31 October in that year. 1 September and 31 December, you must file your return and pay by 31 October in the following year.
How to File the CAT Return
The CAT return can be filed online via Revenue’s Online Service (ROS). If you do not already have a ROS account, you will need to create one. After logging in, you can fill out the CAT return form and submit the CT return electronically.
Provide Accurate Valuations
A fair value of the gift or inheritance must be given in the CAT return. Your income covers transfers of any asset, in which case you calculate the value in euros using the rates of exchange on the day that you get the asset, if it is abroad.
Paying the CAT
After the CAT return is prepared, you have to remit the tax due. The payment needs to happen by 31 October the same year or 31 October the following year depending on the valuation date. Payments can be made via ROS, bank transfer or at a payment point.
Tax Payment Methods
The CAT can be paid electronically, with debit card and bank draft. Make cheques payable to the Revenue Commissioners. When paying through ROS, direct debits can also be set up for ease of payment.
Late Payment Penalties
If you do not file CAT return or make payment of tax within the prescribed time period, then penalty or interest may be levied. Filing on time can help you avoid added costs.
The essential steps to make a CAT declaration and payment in Ireland are to file a CAT return to the Revenue Commissioners within four months of the relevant valuation date for the asset received and to make any payment of tax due by the due date.
CAT Payment Dates & Methods
CAT payment dates depend on the valuation date. If it falls between 1 January and 31 August, payment is due by 31 October that year. If it falls between 1 September and 31 December, payment is due by 31 October the following year. You can pay online by card or bank transfer, or send a cheque with the IT38. The return and payment must arrive by the deadline, though instalment plans may be available if you cannot pay in full. Early filing keeps everything running smoothly.
Conclusion
Understanding Capital Acquisitions Tax in Ireland is essential for anyone receiving a gift or inheritance or planning the future transfer of assets. With varying thresholds, specific exemptions, and detailed filing rules, knowing how CAT works protects you from unexpected liabilities and ensures full compliance with Irish tax law. By using available reliefs such as agricultural, business, spouse, and dwelling house exemptions, you can significantly reduce your tax exposure. Whether you are planning ahead or navigating an inheritance today, staying informed and seeking expert advice will help you make confident, tax efficient decisions that safeguard both your assets and your peace of mind. Our accountants in Dublin can guide you through every step.