Capital Gains Tax Ireland: 4 Tips For Filing Your CGT Return
New to Capital Gains Tax in Ireland? Here’s Everything You Need to Know
Capital Gains Tax (CGT) is a tax on the profits made from the disposal of assets. In Ireland, individuals are liable to pay CGT on the gains made from the disposal of assets such as property, shares, and jewellery. However, there are a number of exemptions and reliefs available which can reduce or even eliminate your CGT liability.
This blog post is designed to provide first-time CGT return filers with a comprehensive guide to filing their returns and paying their taxes correctly. We’ll delve into the key aspects of CGT, including understanding what constitutes a disposal, identifying eligible reliefs and exemptions, and meeting payment and filing deadlines.
What is the Rate of Capital Gains Tax in Ireland?
The standard rate of Capital Gains Tax (CGT) in Ireland is 33%, which will apply in the vast majority of cases. This means that you will pay 33% tax on the chargeable gain you make from the disposal of an asset.
For certain types of assets, such as foreign life assurance policies and units in offshore funds, a higher rate of CGT of 40% may apply.
In addition, a special rate of CGT of 80% applies to certain windfall gains, which are gains that are considered to be particularly large or unexpected. These gains typically arise from the disposal of assets that have appreciated significantly in value over a short period of time.
Capital Gains Tax Ireland: Filing Your Return
Individuals must file a Capital Gains Tax (CGT) return if they have either:
- made gains from the disposal of an asset
- disposed of an asset where no tax is due because of the availability of reliefs or losses
They may also be liable to pay CGT on the income. Regardless of the amount gained, or whether the income is taxable, all profits made must be declared to the Revenue Commissioners. This is the case whether you sell, gift or exchange the asset.
Filing a CGT return can be a complicated process, particularly for first-timers. Our tax experts have over 20 years of experience helping people file their CGT returns in Ireland. We have an in-depth understanding of the Irish tax system.
Here are a few things you should know as a first-time CGT payer to help you file and pay correctly.
1) “Dispose” Doesn’t Always Mean “Sell”
In the context of CGT, the term “disposal” is often equated with the sale of an asset. In practice, the Revenue Commissioners actually use the term to refer to a wide range of methods. Any transfer of ownership of an asset is considered disposal. This includes giving a gift, exchanging one asset for another, or receiving compensation or insurance for an asset.
It is important to note that CGT is levied on the gain made from disposing of the asset. This means that if you paid €X for a piece of land and disposed of (sold) it for €Y, you are only liable to pay tax on the difference (Y-X).
While many of our clients come to us for assistance with the disposal of property or Relevant Tax on Share Options (RTSO), these are not the only assets subject to Capital Gains Tax. An asset is any item of value, tangible or intangible, that can be converted into cash. This includes foreign currency, land, insurance policies, company shares, jewellery, patents and copyrights.
There are some CGT-exempt assets identified by the Revenue Commissioners. You are not liable to pay Capital Gains Tax in Ireland on gains from items like lottery wins, government stocks, animals, certain bonuses and moveable property under €2,540.
If you are unsure whether your asset disposal gains are liable to CGT, contact us to discuss your circumstances and receive a quote.
2) You Can Always Claim CGT Reliefs/Exemptions
It is important to be aware of all the CGT exemptions and reliefs available to you, particularly if it’s your first time filing a CGT return.
While there are many CGT reliefs available, eligibility depends on the individual taxpayer’s circumstances. The exception to this is the Personal Exemption which exempts the first €1,270 of income gained from CGT for each person, each tax year.
Being eligible for certain reliefs depends on when the asset was bought or owned. The Indexation Relief, for example, can be claimed if the asset was owned before 2003.
This relief accounts for inflation rates by assigning an “indexation factor” for each preceding year. Costs incurred up to 31 December 2002 are multiplied by the indexation factor. The total can be claimed against your CGT.
Capital Gains Tax on Property
There is also a relief for gains made on property acquired between 7 December 2011 and 31 December 2014, then sold on or after 1 January 2018. You can claim full relief if you have owned this property for between four and seven years. If you have owned the property for more than seven years you can claim partial relief.
Other reliefs depend on the type of asset and the circumstances surrounding both ownership and disposal. For example, the Principal Private Residence (PPR) Relief can be claimed against gains made from the disposal of a property that you lived in as your main residence. If you also used the property as a place of business, you may receive partial relief, proportionate to the amount of the property used.
Similarly, you may be exempt from Capital Gains Tax in Ireland on gains made from the transfer of a site from parent to child. That is if the house built on that site is the child’s only or primary residence. In this instance, the property must be one acre or less and be worth no more than €500,000.
Additional CGT reliefs
- Farm Restructuring Relief – if you dispose of farmland for restructuring purposes.
- Revised Entrepreneur Relief – if you (a qualifying business) dispose of qualifying business assets.
- Retirement Relief – if you are 55 years or older and dispose of business or farming assets.
3) The Payment And Return Deadlines Are Different
The CGT payment deadline varies depending on when the disposal was made. CGT on disposals between 1 January and 30 November must be paid by 15 December of the same year. Tax on disposals made between 1 December and 31 December must be paid by 31 January of the following year. Payment of CGT can be made using the Revenue Online Service.
The CGT return deadline is 31 October of the year following disposal. This means that if you sold shares in November 2023, you must declare it on your CGT return by 31 October 2024.
Remember! Before you can file and pay, you must first register for Capital Gains Tax in Ireland by sending a request to your regional registration office or reaching out to a tax expert such as Tax Return Plus.
4) Living or Earning Abroad Doesn’t Mean You’re Exempt
Living and/or earning in another country does not exempt you from filing a return and paying your Capital Gains Tax in Ireland.
Non-Residents
If you are not an Irish resident but you dispose of an asset in Ireland, you must file a CGT return and pay any relevant tax. This includes gains on the sale of property in Ireland, any share sale proceeds that are remitted to Ireland and any assets used for the purpose of trade carried out in Ireland.
How to register for Capital Gains Tax in Ireland: Non-resident individuals must contact Revenue to register for CGT and can then file and pay where relevant. Alternatively, you can also reach out to our team here at Tax Returns Plus who can assist you through the process.
Foreign Assets
If you are resident in Ireland making gains on the disposal of certain foreign assets, you must file a CGT return and may be liable to pay tax on the gain. CGT applies to the disposal of assets such as foreign life insurance policies, offshore funds and foreign currency. However, you may be able to claim a relief if you have paid foreign Capital Gains Tax on an asset such as a foreign property.
Navigate Capital Gains Tax in Ireland with Tax Returns Plus
Filing Capital Gains Tax in Ireland can be a complex and daunting tax for individuals and businesses in Ireland. It can be difficult to understand the rules, calculate your liability, and file your return accurately. But it’s important to do so, as failing to comply with CGT regulations can lead to fines and penalties.
If you are unsure whether you fall into either of these categories, we recommend consulting a tax expert before filing your CGT return. Whether you’re a seasoned tax filer or just starting out, Tax Returns Plus is here to make your CGT experience easier and more stress-free.
Our experts can help you identify the relevant income and uncover all the credits for which you are eligible. Complete our short form now to receive a quote and find out how our team can help you with your CGT return this year.