Capital Gains Tax in Ireland: Rules & Relief Explained

What is Capital Gains Tax?

Capital Gains Tax (CGT) is paid on gains from disposing or selling an asset. Individuals liable to pay CGT must do so via the Revenue Commissioner self-assessment system, regardless of whether they are PAYE taxpayers.

The standard rate of Capital Gains Tax arising on disposals is 33%. The first €1,270 of a gain is exempt from Capital Gains Tax for each individual.

Under the Irish CGT provisions, an individual is taxed on the difference between the sale proceeds and the base cost of an asset (increased by an index based on inflation).

In other words, it is the chargeable gain of an asset which is the difference between:

The amount you received it for (sale price) – the amount you paid for it (purchase price)

Deductions are allowed concerning the incidental costs of acquisition and disposal (e.g. stamp duty, legal and auctioneers’ fees, advertising, etc.).

To know more about how to calculate CGT, visit the Irish Revenue page.

Foreign Currency

Under Irish rules, proceeds and costs denominated in a foreign currency must be converted into Irish currency at the exchange rate applicable (spot rate) to determine the appropriate chargeable gain.

Payment of Capital Gains Tax and reporting requirements

Capital Gains Tax arising in respect of disposals made in the period from 1 January to 30 November is due for payment by 15 December of that year. Capital Gains Tax arising on disposals made in the period from 1 December to 31 December is due for payment by 31 January in the following year.

CGT and Non-Doms

A non-Irish-domiciled individual who is resident or ordinarily resident is liable to capital gains tax on the following:

• Gains arising on the disposal of chargeable assets situated in Ireland at the time of the disposal

• Remittances into Ireland of proceeds of gains from the disposal of assets situated outside of Ireland.

Where an individual is a non-resident and non-ordinarily resident, they are only liable to capital gains tax on gains arising on the disposal of specified Irish assets. Specified Irish assets include land and buildings situated in Ireland and assets situated in Ireland which at the time of disposal or earlier were used for trade in Ireland.

What is an Asset?

It’s important to understand what is considered an asset and what is considered a disposal.

• An asset is an item of value (tangible or intangible) that can be converted into cash. Common examples of assets that are eligible for CGT include land, properties, private/public company shares, insurance policies, foreign currency or patents.

• From a CGT perspective, disposal of an asset refers not only to sales of assets but also to any transfer of ownership. These include the exchange, sale, gift or receipt of an asset.

CGT is levied only on the gain made from the disposal of the asset, which is the difference between the sale proceeds and the purchase cost.

CGT Exemptions And Reliefs

The following are several exemptions available to individuals:

• Annual gains tax exemption of up to €1,270 for each individual. For married couples, the exemption is €1,270 each, which is non-transferable.

• Sale of tangible moveable property not exceeding €2,540.

• Sale of tangible moveable property, which is a wasting asset and does not qualify for a capital allowances claim

• Sale of principal private residence (except where sale proceeds reflect development value).

• Sale of a dwelling house occupied rent-free by a dependent relative.

• Disposal of certain shares.

• Gains or profits on sales of Government Securities or Savings Certificates.

• Transfer of assets between spouses living together.

• Gains on the sale of Irish Government securities, where the security has been held for at least two years.

• Disposals of individual works of art which are valued at not less than €31,740 when loaned to an approved gallery or museum for public display for a minimum period of ten years from 2/2/2006 (for loans made before 2 February 2006 the loan period is six years).

• Transfer of a site from a parent to a child including a foster child supported by the donor for five years before the child turns eighteen years of age, provided it is for the construction of the child’s principal private residence. The maximum marketable value of the site is €500,000. The relief is limited to one site per child (this is limited to 1 acre exclusive of the area where the house is to be built). The threshold applies where both parents make a simultaneous disposal of a site to a child.

• Gains arising from personal injury compensation payments to permanently incapacitated individuals, where the exempt income and gains are greater than 50% of an individual’s total income and gains.

Retirement Relief

Retirement relief is available to individuals who dispose of all or part of the ‘qualifying assets’ of their business. The qualifying assets can include business assets used in a trade (like buildings, premises, goodwill or farming land) or family company shares.

CGT retirement relief can reduce a CGT tax bill on the sale of such assets to zero, provided certain conditions are satisfied.

The following qualifying conditions apply:

• The individual must be 55 or over. The amount of relief is restricted if the individual is older than 66.

• An individual, not a company must make the disposal.

• The disposal must be of qualifying assets (e.g. business assets or family company shares).

• When the disposal is of family company shares the individual must have been a working director for a minimum of 10 years up to the date of disposal, 5 of which were on a full-time basis.

• The qualifying assets must have been held for a minimum period immediately before the disposal – normally 10 years.

It is not retirement in the strictest sense. An individual could sell their company and remain active as a Director and/or Shareholder while still availing of the relief. 

Note: The information available here may change from time to time. We will try our best to update it if there is any changes.  

CGT retirement relief is dealt with under two sections in Irish tax legislation:

Disposals to a child.

If an individual is between 55 and 66 on the date of disposal of assets to a child, they can get full CGT retirement relief. If the individual is older than 65 then relief is only given to the first €3m. 

The child here needs to be aware that there is a clawback of the relief if the child disposes of the assets within 6 years. 

CGT and Cryptocurrencies

The recent guidance from Revenue has provided clarity here:

Gains and losses incurred on cryptocurrencies are chargeable or allowable for CGT if they accrue to an
individual.

Only if the cryptocurrency is owned by an individual, then CGT will apply.