The rates
The headline rate has been 33% since 6 December 2012. A small number of gains carry different rates, and it is worth checking which one applies before assuming the headline figure.
| Type of gain | Rate |
|---|---|
| Most gains | 33% |
| Foreign life policies and foreign investment products | 40% |
| Venture capital fund gains — individuals and partnerships | 15% |
| Venture capital fund gains — companies | 12.5% |
Every individual has an annual personal exemption of €1,270. It applies to the first €1,270 of chargeable gains in a tax year, it cannot be transferred between spouses, and it cannot be carried forward if unused.
The deadlines, which are unusual
Irish CGT separates payment from filing, and puts the payment first. This is the single most common reason people end up paying interest on a gain they were perfectly willing to declare.
| Disposal date | Tax payable by | Return due by |
|---|---|---|
| 1 January to 30 November (the initial period) | 15 December of the same year | 31 October of the following year |
| 1 December to 31 December (the later period) | 31 January of the following year | 31 October of the following year |
You pay before you file. Someone who sells in March and waits for their accountant in the following autumn has already missed the payment deadline by ten months, even though the return is not yet late.
The return must be filed even where no tax is due — for example because the gain was covered by the annual exemption or by a relief. A nil liability does not remove the filing obligation.
Calculating the gain
- Start with the sale proceeds, or market value where the disposal was not at arm's length.
- Deduct the cost of acquisition, including stamp duty and legal fees paid on the way in.
- Deduct enhancement expenditure — capital improvements reflected in the value at disposal, not repairs.
- Deduct the incidental costs of disposal such as auctioneer, legal and advertising fees.
- Deduct any allowable losses, current year first, then losses carried forward.
- Deduct the personal exemption of €1,270 if you are an individual and have not used it.
- Apply 33% to what remains.
For assets acquired before 2003, indexation relief may increase the allowable cost, which reduces the gain. Indexation was abolished for periods after 31 December 2002, so it only helps on long-held assets.
The seven-year property exemption
Section 604A gives full relief from CGT on land or buildings in Ireland or the EEA acquired between 7 December 2011 and 31 December 2014, where the property was held for a continuous period of at least four years.
Where the property has been held for more than seven years, the relief becomes partial. The exempt proportion of the gain is seven divided by the number of years of ownership. A property held for ten years therefore has seven-tenths of the gain exempt, and three-tenths chargeable.
Other reliefs worth knowing
Principal private residence relief
A gain on the sale of your main home is generally exempt, along with grounds of up to one acre. The relief is restricted where the property was not your main residence for the whole period of ownership, or where part of it was used exclusively for business.
Retirement relief
Despite the name, this relieves gains on the disposal of qualifying business or farming assets by someone aged 55 or over, and does not require actual retirement. There are ceilings which differ depending on whether the disposal is to a child or to a third party, and the rules were amended in recent Finance Acts. It is worth planning several years ahead of a disposal rather than discovering the conditions afterwards.
Entrepreneur relief
Revised entrepreneur relief applies a reduced 10% rate to qualifying business disposals, subject to a lifetime limit on gains. The conditions concerning ownership period and working time in the business are strict, and failing one of them moves the whole gain back to 33%.
Transfers between spouses
Transfers between spouses and civil partners living together are treated as giving rise to no gain and no loss. The receiving spouse takes over the original base cost, so the gain is deferred rather than removed.
Losses
Allowable capital losses are set against chargeable gains in the same year, and any excess carries forward indefinitely against future gains. Losses cannot be set against income, and they cannot be carried back except in the year of death.
Because the annual exemption cannot be carried forward, there is a sequencing point here. Where you have both gains and losses in a year, the order in which they are applied affects how much of the €1,270 you actually get the benefit of.
Non-residents and Irish assets
A person who is neither resident nor ordinarily resident in Ireland is still within the charge to Irish CGT on specified Irish assets — land and buildings in the State, minerals and mineral rights, exploration rights, and unquoted shares deriving the greater part of their value from those assets.
On disposals of Irish land and buildings above a set consideration threshold, the buyer must withhold 15% of the price and remit it to Revenue unless the seller produces a CG50A clearance certificate. Sellers who do not apply for that certificate in advance routinely lose 15% of the proceeds to a withholding they then have to reclaim.