Many Irish families are spread across several countries, and an estate can end up divided between children in Dublin, London, Boston, Sydney and Dubai. For those families, a change that took effect on 7 October 2026 matters: the tax-free thresholds for Ireland's gift and inheritance tax, known as Capital Acquisitions Tax (CAT), went up. The Finance (No. 2) Bill 2026, published on 19 October, puts the new figures into law.
The thresholds are only half of the story for a family spread across countries. The other half is a set of residence rules that decide whether Ireland taxes an inheritance in full, only in part, or not at all. Nationality plays no role in them.
The New Thresholds
CAT is charged at 33% on the value of a gift or inheritance above a tax-free threshold, according to Revenue. The threshold depends on the relationship between the person giving (the disponer) and the person receiving (the beneficiary). Section 66 of the bill raises all three for gifts and inheritances taken on or after 7 October 2026, and Revenue's threshold table already shows them:
| Group | Main relationships | Until 6 Oct 2026 | From 7 Oct 2026 |
|---|---|---|---|
| A | Children of the disponer (including adopted and stepchildren) | €400,000 | €420,000 |
| B | Brothers, sisters, nieces, nephews, grandchildren, parents in some cases | €40,000 | €44,000 |
| C | Everyone else, including aunts, uncles, cousins, in-laws and friends | €20,000 | €22,000 |
Revenue's guidance on CAT groups sets out the detail, including when a minor grandchild qualifies for Group A because the grandchild's parent has died, and the special rule for parents who inherit from a child. Gifts and inheritances between spouses or civil partners are exempt.
In his Budget statement, the Minister for Finance noted that the thresholds "were last increased in 2024". For a child inheriting €600,000, the increase lowers the taxable excess from €200,000 to €180,000 and the tax from €66,000 to €59,400.
Three Rules That Catch Families Out
Before turning to residence, three mechanics apply to everyone:
The threshold is a lifetime figure per group. Revenue explains that the threshold applies to the total of all gifts and inheritances received within the same group since 5 December 1991. A child who received a substantial gift from a parent years ago has already used part of the Group A threshold.
A return is due well before tax is due. A beneficiary must file a CAT return once the total taxable value of benefits within a group exceeds 80% of the threshold, according to Revenue.
The deadline is fixed by the valuation date. If the valuation date falls between 1 January and 31 August, tax must be paid and the return filed by 31 October of the same year; if it falls between 1 September and 31 December, by 31 October of the following year, as Revenue's filing guidance explains.
Who Ireland Taxes: The Residence Tests
The scope of CAT is set by section 6 of the Capital Acquisitions Tax Consolidation Act 2003 for gifts and by section 11 for inheritances. For dispositions made since 1 December 1999, the structure is the same in both:
Test 1: the disponer. If the person giving or leaving the property is resident or ordinarily resident in Ireland at the date of the disposition, the whole gift or inheritance is taxable, wherever the assets are and wherever the beneficiary lives. For an inheritance under a will, that date is in practice the date of death.
Test 2: the beneficiary. If the person receiving is resident or ordinarily resident in Ireland at the date of the gift or inheritance, the whole of it is taxable, even if the disponer lived abroad and the assets were abroad.
Test 3: the assets. If neither person passes either test, only property situated in Ireland is taxable, such as a house or land in Ireland.
A fourth rule modifies the first two for people who are not domiciled in Ireland. A non-domiciled person is treated as neither resident nor ordinarily resident for these tests unless they have been resident in Ireland for the five consecutive tax years before the year of the gift or inheritance and are resident or ordinarily resident on the date itself.
The residence tests use Ireland's income tax definitions. Revenue explains that a person who has been resident for three consecutive tax years becomes ordinarily resident from the fourth, and remains ordinarily resident for three tax years after leaving.
What the Rules Mean in Practice
The tests produce results that surprise families who assume that living abroad keeps them out of Irish tax. The following cases apply the statutory tests to typical situations. They are illustrations, not advice on any particular estate.
A parent in Ireland, children abroad. A widow living in Cork leaves her estate to a son in Sydney and a daughter in Toronto. Because she was resident in Ireland, Test 1 makes each inheritance taxable in full, including any assets she held outside Ireland. Each child uses their own Group A threshold of €420,000, and the excess is taxed at 33% in Ireland. Living abroad does not change this.
A parent who emigrated long ago. A father who moved to Spain decades ago, is long past his three years of ordinary residence and is not resident in Ireland when he dies, leaves his estate to children who also live abroad. Neither Test 1 nor Test 2 applies, so Ireland taxes only property situated in Ireland, such as a family house in Mayo. His Spanish assets are outside Irish CAT, although Spain applies its own rules.
A parent who left recently. A mother who lived in Ireland for decades moves to Portugal and dies two years later. She may still be ordinarily resident in Ireland when she dies, because ordinary residence continues for three tax years after departure. If so, Test 1 applies and the whole inheritance is taxable in Ireland.
A child who has moved home. A daughter who returned to Dublin receives a gift from her father, who lives in New York. Test 2 makes the whole gift taxable in Ireland, because the beneficiary is resident. If she is not Irish-domiciled, the five-year rule may keep her outside Test 2 for her first years back.
A newcomer to Ireland. An American executive who moved to Dublin three years ago and is not domiciled in Ireland makes a gift of US shares to her son in California. Under the five-year rule she is treated as neither resident nor ordinarily resident for CAT, and her son lives abroad, so only Irish property would be taxable. After five full tax years of residence, that changes.
Two Countries Can Tax the Same Estate
Because Ireland taxes based on the residence of either side, and other countries use their own tests, the same inheritance can fall within two systems. Revenue lists the credits available against CAT, including double taxation relief under the UK treaty, relief under the treaty with the United States, and a unilateral relief, set out on its page on credits against CAT.
Under the UK treaty, Revenue explains, credit is given for tax paid on UK property, limited to the lower of the UK and Irish effective rates and never more than the Irish tax, and it must be claimed within six years. For families with a UK connection, the Brief's piece on how long UK inheritance tax follows you covers the other side of that relationship.
What Families Can Sensibly Do
Map residence, not passports. For every parent and every child, the question is where each person is resident and ordinarily resident, and whether they are domiciled in Ireland. Those facts, at the right dates, decide which tests apply.
Keep a record of past gifts. Because thresholds aggregate since 1991, an old gift can decide the tax on a later inheritance. A simple family schedule of gifts, dates and values saves a great deal of work later. The Brief's case for the paper trail that saves you applies to families as much as to individuals.
Diarise the filing date early. For beneficiaries abroad, the deadline is easy to miss because it is set by the valuation date, not by the date the money arrives. An inheritance with a valuation date in August must be paid and filed by 31 October of the same year; one with a valuation date in September has until 31 October of the following year. Late filing carries charges, which Revenue sets out separately.
Watch the three-year tail when someone emigrates. A parent who leaves Ireland late in life may remain within Irish CAT for some years. Planning a move with that in mind is easier than discovering it in an estate.
Compare both sides before assuming which costs more. At 33% above a €420,000 threshold per child, the Irish figure is easy to calculate; the tax in the other country involved may be higher, lower or nil, and it depends on that country's own tests. The Brief's honest assessment of Ireland as a tax base and its broader look at living in Ireland put the tax in context.
The Finance (No. 2) Bill 2026 still has to pass all stages in the Oireachtas, but the new thresholds apply to gifts and inheritances taken on or after 7 October 2026, and Revenue already applies them.
Work with Sebastian
If your family's assets and members are spread across Ireland and other countries, and you want to understand which country taxes what when wealth passes between generations, that is the kind of cross-border question Sebastian works on with internationally mobile clients. Book a consultation.
