Inheritance tax in Ireland is generally dealt with through Capital Acquisitions Tax, or CAT. The focus is usually on the person receiving the benefit, rather than a single tax charge calculated on the deceased person's whole estate. That is an important distinction when comparing Irish rules with another country's system.
An inheritance does not automatically produce a tax bill. The relationship between the beneficiary and the person who died, earlier benefits, exemptions and any available relief all need to be considered.
Start with the beneficiary
The person providing the gift or inheritance is called the disponer. Each beneficiary's position is assessed by reference to the applicable rules. Two people receiving equal amounts from the same estate may have different tax outcomes because their relationships and previous benefits differ.
Gifts and inheritances between spouses or civil partners are generally exempt from CAT. An unmarried partner does not automatically receive that exemption.
Work through the calculation
Broadly, the taxable value is established after considering the relevant deductions, exemptions and reliefs. The appropriate group threshold and earlier taxable benefits in that group then affect the amount, if any, charged at the applicable rate.
CAT is currently charged at 33% on the taxable excess. The calculation should use the rules and threshold applicable to the relevant benefit, rather than whichever figures happen to be familiar from an older article.
A relief can reduce taxable value without removing every reporting obligation. Agricultural and business relief, for example, require careful attention to both conditions and filing.
Keep useful records
Retain valuations, details of earlier gifts and inheritances, and records supporting any exemption or relief claimed. The date of the inheritance and the valuation date serve different purposes and may not be the same.
Revenue may require an IT38 return even where no tax is payable. Do not assume that being below a tax threshold necessarily means there is nothing to report.
For estate planning, consider the likely position of the intended beneficiaries before deciding on valuable gifts. A person inheriting a home or business may need to meet a liability without immediately having cash available.
Use the current Revenue guidance and obtain advice where the assets, residence position or relief claims are complex. A clear will and a clear tax plan should support each other.
Sources and further reading
General information, not advice on your individual circumstances. Laws and tax rules can change; check the linked official guidance and obtain professional advice where needed.