Tax on gift to non-resident child?

murphaph

Hi all,
Hoping someone can advise.

Say a parent of an adult child lives and is tax resident in Ireland and sells their home for 200k.

They gift 100k to one of their adult children who is not tax resident in Ireland and does not live there and is not domiciled there.

What tax is due by either the parent or the child to Revenue in Ireland? (For info, the child lives and is tax resident in a country where each parent may gift up to 400k to each of their children every decade and no gift tax is due)

nompere

From here: http://www.revenue.ie/en/tax/cat/gift-inheritance.html we have:

"Gifts or inheritances of Irish property are liable to tax whether or not the disponer is resident or domiciled in Ireland. Foreign property is liable to tax where either the disponer or the beneficiary is resident or ordinarily resident in Ireland at the relevant date."

And from here: http://www.revenue.ie/en/tax/cat/thresholds.html we see that there is a threshold between a parent and child of €225,000.

So although a gift of Irish property (cash) is within the charge to tax, as the disponer (the giver) is resident here, there isn't any tax as the gift is less than the threshold.

murphaph

Hey,
Yeah I had read that already but to be honest wasn't sure if the reference to "property" meant "real estate" or "any property". I just found the expression "Irish property" a strange one to describe cash in the bank, which can be legally moved to a bank outside the state in the click of a mouse. Is the cash considered Irish property because the disponer is tax resident in Ireland or because it's sitting in an Irish bank?

I should have been clearer in my first post also:
There will likely be further inheritances from this parent in the form of actual real estate that will exceed the 225k cap, so I'm particularly interested in how this cash aspect can be gifted with as little (preferably none) tax paid. Legally of course. I'm aware of the 3k rule, so it could be gifted to the child, his wife and their children in 3k lumps each year...would take about 10 years to gift it and avoid tax that way.

Was just hoping against hope that a cash gift where the beneficiary is non-resident would not be taxable, but I suspect you are correct in your assertion and there is the usual CAT tax liability as the disponer is Irish tax resident....so it'll have to be the drip drip method.

nompere

Here are three definitions from Section 2, Capital Acquisitions Tax Act 2003:

‘‘personal property’’ means any property other than real property;

‘‘property’’ includes rights and interests of any description;

‘‘real property’’ means real and chattel real property

Cash in an Irish Bank is Irish property. Yes, of course it may be easily moved. That's why foreign property is within the charge to tax if either the donor or the donee is resident or ordinarily resident at the time of the gift or inheritance.

If you want help with legal CAT avoidance planning you need to consult a professional.