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A
capital gains tax is chargeable on the gains arising from the
disposals of assets. Any form of property (other than Irish currency)
including an interest in property (as, for example, a lease) is an
asset for capital gains tax.
Disposal of assets
Disposal
of an asset includes
- A transfer by sale,
exchange, or gift,
- the settlement of an
asset on trustees, or
- the receipt of a
capital sum derived from assets such as compensation or
insurance money in respect of the loss or destruction of an
asset or for forfeiture or surrender of rights.
However,
the death of an owner of assets is not an occasion of charge in
respect of those assets. Where a disposal is made other than by way
of an arm's length sale between connected parties, the consideration
is deemed to be equal to the market value of the asset at the date of
disposal.
Persons chargeable and the extent of the charge
All
persons who are resident or ordinarily resident in the State for a
year of assessment are liable to the tax in respect of chargeable gains
accruing in that year on the disposal of assets, wherever the assets
are situated. The charge extends to individuals, companies, trustees
and other bodies of persons.
Individuals
resident or ordinarily resident, but not domiciled, in the State are
chargeable to tax on gains on the disposal of chargeable assets
located outside the State, only to the extent that such gains are
remitted to this country.
Non-resident
persons are chargeable to tax on gains made on the disposal of
specified assets including:
- immovable property
situated in the State, minerals or mineral rights in the State
(including the Irish area of the Continental Shelf),
- shares in a company
derviving the greater part (>50%) of its value from such
property or mineral rights,
- on the disposal of
assets used for the purposes of a trade carried on in the State
through a branch or agency.
Basis of tax charge and payment of tax
The
tax is charged based on each tax year (i.e. 1st January to 31st
December). Tax on gains made in January to November is payable by 15 December
in the same tax year. Tax on gains made in December is payable by 31
January in the next tax year. A return must be made by 31 October of
the following year.
Calculation of gain
The
taxable gain is the amount of the consideration as reduced by
"deductible expenditure", that is, the cost of acquisition
and certain enhancement expenditure. Deductible expenditure is also
adjusted for inflation (indexation relief). This adjustment is not
made in respect of any expenditure incurred within one year of the
date of disposal of the asset. Indexation relief is available to all
taxpayers, including companies and non-residents.
In
the case of development land, indexation relief applies only to the
current use value (i.e. value without permission to develop or change
its use) at the date of acquisition (or 6 April 1974, if later).
Irish Capital Gains Tax Rates
The CGT rate is currently 25% (since 8/4/09). It
was 22% from 15/10/08 to 7/4/09 and 20% prior to 15/10/08.
CGT Exemptions and reliefs
Various
exemptions and reliefs from capital gains tax are provided, the most
important being the following:
1.
The first Euro1,270 of taxable gains by an individual in a tax year
are exempt. In the case of a married couple this exemption is
available to each spouse but is not transferable.
2.
Gains realised on the following are not taxable gains:
(i)
Irish government securities, including land bonds, prize bonds,
savings certificates and bonuses payable under the National
Instalment Savings Scheme;
(ii)
securities of local authorities, certain State-sponsored bodies and
the European Union;
(iii)
futures contracts based on government and other securities that are
not chargeable assets for the purposes of capital gains tax;
(iv)
life assurance policies and contracts for deferred annuities, unless
purchased from another person etc.
(v)
movable non-wasting assets sold for Euro2,540 or less;
(vi)
wasting chattels, such as private motor cars, animals;
(vii)
winnings from betting, lotteries and sweepstakes;
(viii)
gains accruing to superannuation funds, charities and certain bodies,
such as local authorities and trade unions;
(ix)
certain works of art valued at not less than Euro31,740 where they
have been loaned to an approved gallery for a period of not less than
six years for display to the public;
(x)
a gain on a dwelling-house (including grounds of up to one acre)
where the house has been used as an individual's only or main
residence (or, under certain conditions, as the sole residence of a
dependent relative) during the individual's period of ownership. In
certain circumstances there may be a restriction on the relief or
partial relief may be due.
Retirement Relief
A
gain on the disposal of a business or farm by an individual aged 55
years or older for a consideration not exceeding Euro750,000 is exempt
from capital gains tax. There is no limit where the disposal is to a
child or a niece/nephew that works in the business. Marginal relief
applies where the consideration does not greatly exceed that amount.
Where the disposal is made to a child of the individual (or, in
certain circumstances, to a nephew or niece), the gain is exempt
irrespective of the amount of the consideration.
This
relief also applies to the disposal of a family business where the
business consists of a group of companies having at their head a
holding company.
Site to a child
Where
a parent transfers a site to a child to enable the child to construct
his or her principal private residence thereon and the value of the
site transferred does not exceed Euro500,000, the transfer is exempt
from CGT. The site excluding the residence must not exceed 1 acre in
size.
CGT Indexation Factors
The
Revenue Commissioners have made Regulations specifying the
multipliers to be used for indexation purposes in order to arrive at
the expenditure allowable as a deduction in computing chargeable
gains accruing on disposals of assets made in the year of assessment
2003. Indexation will not apply to assets acquired after 31st
December 2002.
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1974/75
|
7.528
|
1988/89
|
1.553
|
|
1975/76
|
6.080
|
1989/90
|
1.503
|
|
1976/77
|
5.238
|
1990/91
|
1.442
|
|
1977/78
|
4.490
|
1991/92
|
1.406
|
|
1978/79
|
4.148
|
1992/93
|
1.356
|
|
1979/80
|
3.742
|
1993/94
|
1.331
|
|
1980/81
|
3.240
|
1994/95
|
1.309
|
|
1981/82
|
2.678
|
1995/96
|
1.277
|
|
1982/83
|
2.253
|
1996/97
|
1.251
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|
1983/84
|
2.003
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1997/98
|
1.232
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1984/85
|
1.819
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1998/99
|
1.212
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1985/86
|
1.713
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1999/00
|
1.193
|
|
1986/87
|
1.637
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2000/01
|
1.144
|
|
1987/88
|
1.583
|
2001
|
1.087
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|
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2002
|
1.049
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