The normal rule for prior gifts/inheritances is that if the gift/inheritance is “taxable” in Ireland, then it aggregates as long as it is made after 5 December 1991. So it must be a “taxable” gift/inheritance.

We blogged previously that for a gift or an inheritance to be taxable in Ireland, there is an important date of the 1 December 1999. For gifts or inheritances after that date, the gift/inheritance will be taxable in Ireland if one of the following three conditions are met:-

• The disponer was ordinarily resident in Ireland;

• The beneficiary is ordinarily resident in Ireland; o

• The asset is situated in Ireland.

There is an important exemption to this rule related to US domicile disponer, which arises under the Irish-US double taxation treaty. Essentially under the treaty an inheritance from a US domiciled citizen of an asset not located in Ireland is not taxable in Ireland even if the beneficiary is ordinarily resident in Ireland.

So for example, Jane has been born and raised in California and leaves her apartment in London to Tom who is has been living in Galway for the last 10 years. Under the normal territorial rules, the London apartment would be subject to Irish CAT. However, because it is an inheritance from someone who has US domicile, Irish CAT does not apply.

Irish CAT would apply if say Jane was born and raised in Ireland and only moved to the US in the last number of years and always intended to return to Ireland. In that case, it may not be the case that Jane acquired US domicile and so the London apartment would be subject to Irish CAT. It should be noted however, that one must check the rules regarding US domicile, as certain commentators have indicated that acquiring US domicile under relevant US rules is easier than say displacing domicile of origin under common law rules.

I’d like to give a shout out to Martin Lawlor of Coghlan Kelly solicitors New Ross and founder of Solicitor Growth, for bringing this issue to my attention.

If you have any probate, tax, will drafting or capacity issues please reach out to me through the query service on the probatehub.ie