Inheritance tax in Ireland applies to both residents and non-residents, including foreigners and expats, at a standard rate of 33% on amounts above the applicable thresholds.
This has consequences for gifts and inheritances, where the rules depend on the recipient’s relationship to the deceased and his tax residence.
This article covers:
- How much can you inherit without paying tax in Ireland?
- Do non-residents pay inheritance tax?
- Do you have to pay Irish inheritance tax if you live abroad?
Key Takeaways:
- The Capital Acquisitions Tax (CAT) is 33% above the thresholds for all recipients, including non-residents.
- Children of Irish residents benefit from the highest exemption (€400,000).
- Non-residents are only taxed on assets located in Ireland.
- The use of waivers, waivers and lifetime gifts can reduce expat obligations.
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The information in this article is intended as general guidance only. It does not constitute financial, legal or tax advice, and is not a recommendation or invitation to invest. Some facts may have changed since the time of writing.
What are the inheritance tax rules in Ireland?
Inheritance tax rules in Ireland apply to both residents and non-residents, with thresholds based on the recipient’s relationship to the deceased.
It is governed by the Capital Acquisitions Tax (CAT).
- Group A: Children inherit from parents
- Group B: siblings, nieces, nephews and lineal descendants
- Group C: All other beneficiaries
The standard CAT rate is 33% on the value above the relevant threshold.
Gifts between spouses or registered partners are exempt. Property, cash, shares and other assets are all subject to CAT unless specifically exempt.
For expats or foreigners, it is crucial to check whether their home country has a double taxation agreement with Ireland as this may affect how CAT is applied.
What is the inheritance tax in Ireland for non-residents?
Non-residents are only liable to CAT for assets located in Ireland. The same group thresholds and 33% tax rate apply.
The assets include:
- Real estate in Ireland
- Shares in Irish companies
- Bank accounts or investments held in Ireland
Foreigners inheriting Irish assets should be aware of:
- How CAT deals with their country of residence
- Possibilities for alleviating double taxation
- The importance of good documentation and valuations
Planning for a non-resident inheritance often involves understanding international tax obligations to avoid surprises.
How much can I inherit before paying tax in Ireland?
You can normally inherit between €20,000 and €400,000 before paying tax in Ireland.
CAT thresholds apply to both residents and non-residents:
- Group A (children of parents): €400,000
- Group B (brothers and sisters, cousins, direct descendants): € 40,000
- Group C (all others): €20,000
Amounts above these thresholds are taxed at 33%.
Exemptions may apply for certain donations, family homes or agricultural/business properties, which may be particularly relevant for expats and non-residents who inherit Irish property or assets.
How do you calculate inheritance tax in Ireland?
Inheritance tax in Ireland is calculated by subtracting the relevant threshold and exemptions from the total value of the inheritance, and then applying the CAT rate of 33%.
To calculate CAT for residents and non-residents:
- Determine the total value of the inherited assets (Irish located for non-residents).
- Subtract applicable thresholds and exemptions.
- Apply the CAT rate of 33% to the remaining value.
Example for expats: A foreign child inherits €500,000 from a parent with Irish property. The Group A threshold is €400,000.
The taxable amount is €100,000, resulting in €33,000 of CAT.
Non-residents must ensure that the valuation of assets meets Irish Revenue requirements, including currency conversions if the inheritance is denominated in a foreign currency.
Who has to pay inheritance tax in Ireland?
Irish inheritance tax applies to anyone who receives assets above the applicable group threshold, regardless of whether they are residents, non-residents or expats.
- Residents are liable for worldwide gifts and inheritances.
- Non-residents are only liable for assets located in Ireland, such as real estate, shares in Irish companies or bank accounts in Ireland.
- Spouses and registered partners are generally exempt.
- Children, siblings and other beneficiaries are subject to CAT based on their relationship group.
Foreigners or expats who inherit Irish assets should be aware of double tax treaties and ensure proper documentation and valuation to comply with Irish tax laws.
How to avoid inheritance tax in Ireland?
Inheritance tax in Ireland cannot generally be abolished, but it can be legally reduced through advance estate planning and the appropriate use of available exemptions and exemptions.
Tax evasion is illegal, while tax avoidance through legal planning is permitted and widely practiced by residents and expats alike.
Common strategies include:
For non-residents and expats, planning should also take into account foreign tax exposure, reporting requirements and how Irish CAT interacts with the tax rules of the country where they live.
Do I have to pay inheritance tax on my parents’ house in Ireland?
You may not have to pay inheritance tax on your parents’ home in Ireland if you qualify for the Homestead exemptionbut the conditions are strict.
The exemption may apply if:
- The heir has lived in the home for the required period and will continue to do so after the inheritance
- The property is inherited from a parent or other qualifying relative
For expats, owning or occupying another property abroad may impact eligibility, as the exemption typically requires the inherited home to be the beneficiary’s primary residence.
Non-resident heirs may still qualify if all conditions are met, but the assessment and documentation process may be more complex.
What should you do first if you inherit money in Ireland?
The first step for residents and expats is to notify the Irish Revenue Commissioners and obtain a professional valuation of the estate.
For non-residents, there are additional considerations:
- Identification of assets located in Ireland subject to CAT
- Check double tax treaties
- Confirm your eligibility for benefits such as the homestead exemption for single-family homes
Good documentation is essential to ensure correct CAT calculation and compliance with Irish law.
Conclusion
Irish IHT can apply even if you live abroad, making it especially important for expats and non-residents to understand how CAT works in practice.
Thresholds, asset location and exemptions are more important than just residence labels.
In Irish real estate and cross-border estates, early planning and correct reporting are often the difference between an efficient transfer and an unexpected tax bill.
Frequently asked questions
How much money can you gift to a family member tax-free in Ireland?
You can donate up to €3,000 per person per year tax-free in Ireland under the Exemption for small giftsregardless of your relationship.
In addition, larger gifts may also be tax-free up to the recipient’s lifetime CAT group threshold, after which CAT applies at 33%.
How do you avoid capital gains tax on inherited property in Ireland?
CGT is based on the increase in value following an inheritance, with provisions such as the waiver of the main home or spousal transfers helping to limit liability.
Capital gains tax does not apply if you inherit property in Ireland, but may apply if you sell it later.
Which costs can be offset against inheritance tax?
Certain debts of the deceased, including outstanding debts and reasonable funeral expenses, can be deducted from the estate before estate taxes are calculated.
General administration costs or inheritance costs are not automatically deductible unless they are incurred directly to determine or realize the taxable value of the assets.
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