Dáil Éireann Debate, Tuesday - 10 February 2026
434. Deputy Shay Brennan asked the Tánaiste and Minister for Finance whether his Department has considered the interaction between U.S. federal estate tax and Irish capital acquisitions tax where Irish residents hold U.S. situs assets. [10348/26]
View answer435. Deputy Shay Brennan asked the Tánaiste and Minister for Finance whether his Department is satisfied that current unilateral relief under Section 107 of the Capital Acquisitions Tax Consolidation Act 2003 adequately protects the Irish tax base, given that U.S. estate tax rates commonly exceed Irish CAT rates, thereby frequently reducing the Irish CAT yield on such assets to nil. [10349/26]
View answer436. Deputy Shay Brennan asked the Tánaiste and Minister for Finance whether his Department has examined the feasibility and fiscal impact of introducing a narrowly targeted CGT-neutral restructuring mechanism to allow Irish residents to transfer direct U.S. situs securities into Irish or EU regulated funds without triggering immediate capital gains tax, subject to anti-abuse safeguards. [10350/26]
View answerI propose to take Questions Nos. 434, 435 and 436 together.
Broadly speaking, an inheritance is chargeable to Capital Acquisitions Tax (CAT) in Ireland where:
• the deceased person was resident or ordinarily resident in the State at the date of the disposition,
• the beneficiary was resident or ordinarily resident in the state at the date of the inheritance, or
• the property was situated in the State at the date of the inheritance.
CAT is payable by the beneficiary of the inheritance at the rate of 33%, to the extent that its taxable value, when aggregated with previous gifts or inheritances taken since 5 December 1991 from within the same Group, exceeds the applicable Group threshold. There are currently three Group thresholds:
• the Group A threshold (currently €400,000) applies, inter alia, where the beneficiary is a child (including certain foster children) of the disponer;
• the Group B threshold (currently €40,000) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer;
• the Group C threshold (currently €20,000) applies in all other cases.
My understanding is that the United States (US) imposes Federal Estate Tax (FET) at rates of up to 40% on the transfer of the worldwide taxable estate of any deceased person who was a US citizen or resident at the date of death. Where the deceased person was not a US citizen or US resident (e.g., was Irish tax resident) only US situate assets are taxed. The FET was first enacted in 1916, and significant changes have been made to it over time. One of the areas where the FET has changed considerably is the level of the “Basic Exclusion Amount” which is effectively the value of an estate that is not subject to tax. Initially set at $50,000, it is currently $15,000,000. However, a significantly more limited threshold of $60,000 applies where the deceased person was not domiciled in the U.S. or a US citizen at the date of death.
Accordingly, where an Irish tax resident individual dies having held US situate assets, both CAT and FET may arise in respect of those assets. However, relief from double taxation may be available under the Convention between Ireland and the US with respect to taxes on estates of deceased persons, or under section 107 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 which provides for unilateral relief for any “foreign tax” of a similar character to CAT arising on property situated outside the State.
The Convention between Ireland and the US was entered into in 1949 and given legal effect by Finance Act 1950. It applies to CAT on inheritances in Ireland and FET in the US. It does not apply to CAT on gifts in Ireland, or to estate or inheritance tax imposed by individual states in the US. Article III(2) of the Convention provides a situs code for the purposes of the Convention. Where the situs code applies, the following categories of assets are deemed to have been Irish situate if the individual was domiciled in Ireland at the date of his or her death, and therefore outside the scope of FET:
• debts due to the deceased, e.g., bank accounts;
• moneys payable under an assurance policy or an insurance policy on the life of the deceased person;
• government securities and shares or stock in municipal or government corporations.
Where the Convention does not apply, relief from double taxation may be available under section 107 CATCA 2003. Such relief would operate by reducing the amount of CAT that is payable on the inheritance by the amount of FET that was paid in respect of the same assets. In circumstances where the amount of FET paid either equals or exceeds the amount of CAT that is payable, then this would result in no CAT being payable on the inheritance in Ireland.
Tax treaties allow for the smooth and regulated taxation of international business and investment activities. Ireland’s longstanding tax treaty policy has been to expand, maintain, and enhance its network to remove barriers and facilitate trade and investment opportunities between Ireland and partner jurisdictions. They provide greater certainty and fairness for taxpayers regarding their tax obligations in foreign jurisdictions and are key to the prevention of double taxation.
In relation to your capital gains tax (CGT) question, I am advised by the Revenue Commissioners that section 29 of the Taxes Consolidation Act 1997 (TCA 1997) provides for the scope of Irish CGT. The proposal outlined in the Deputy’s query is made in the context of Irish residents. Section 29(2) TCA 1997 provides that, subject to any statutory exceptions, Irish tax resident persons are chargeable to CGT in respect of gains accruing to them on the disposal of assets, wherever located. As such, should an Irish tax resident person dispose of securities located in the U.S., such persons are chargeable to CGT in respect of any gains accruing to them on foot of this disposal, subject to any exemptions or reliefs that may apply in the specific circumstances of the disposal.
The Deputy’s proposal relates to the transfer of U.S. located securities into Irish or E.U. regulated funds. Irish regulated investment funds are taxed under the ‘gross-roll up’ regime. Under this regime, a ‘gross roll-up’ applies such that there is no annual tax on income or gains arising to a fund. Instead, exit tax arises in respect of payments made to certain unit holders in that fund or on the sale of units by those unit holders. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. The taxable gain arising on the 8-year deemed disposal (the chargeable event) is the value of the units at the time less the amount invested. Exit tax applies at a rate of 38% (with effect from 1 January 2026) in respect of Irish resident individual investors (unless the fund is a Personal Portfolio Investment Undertaking in which case tax at 60% applies), and 25% in respect of Irish resident corporate investors. For individual investors, USC does not apply and PRSI may apply. Where the units in an Irish regulated investment fund are bought and sold on a stock market (i.e. quoted) and cleared through a recognised clearing system, such as an Exchange Traded Fund, the investor must account for the tax through the self-assessment system.
In the case of regulated funds located in other EU/EEA countries, as such funds are subject to the same regulation as Irish funds, the tax treatment of an investment in such a fund is similar to that which applies in respect of an investment made in an Irish domiciled regulated fund. Investments in funds located in other OECD member states, where the fund is substantially similar to an Irish fund, are also taxed on a similar basis to investments in Irish funds. Irish investors are required to account for the tax through the self-assessment system at the rate of 38% for individuals (with effect from 1 January 2026) and 25% in respect of Irish corporate investors.
