6 Taxable gift

Summary

Where a gift is taken under a disposition made before 1 December 1999, all the property comprised in the gift is liable to tax where the disponer is domiciled in the State. Property located in the State is liable to tax irrespective of the domicile of the disponer.

Where a gift is taken under a disposition made on or after 1 December 1999, all the property comprised in the gift will be liable to tax where—

• the disponer is resident or ordinarily resident in the State at the date of the disposition, or
• where the donee (i.e. the beneficiary) is resident or ordinarily resident in the State at the date of the gift.

A foreign-domiciled person will not be considered to be resident or ordinarily resident in the State until 1 December 2004 and then only if he/she has been resident in the State for the 5 consecutive tax years preceding the relevant date.

Special rules apply to the taxation of gifts taken by donees from discretionary trusts.

Details

(1) Where a gift is taken under a disposition made prior to 1 December 1999, the entire property comprised in the gift is liable to tax where, at the date of the disposition, the disponer is domiciled in the State.

There are separate rules for determining to what extent, if any, a gift taken under a discretionary trust is taxable. Such a gift is taxable where the disponer was domiciled in the State—

• at the date of the disposition under which the donee takes the gift (generally the date the trust was created), or
• at the date of the gift,

or was so domiciled at the time of his/her death, where the gift was taken after his/her death.

(2) Where a gift is taken under a disposition made on or after 1 December 1999, the entire property comprised in the gift is liable to tax in the following situations:

• where the disponer is resident or ordinarily resident in the State at the date of the disposition;
• where the gift is taken under a discretionary trust and the disponer is resident or ordinarily resident in the State at the date of the disposition or at the date of the gift;
• where the gift is taken under a discretionary trust after the death of the disponer and that disponer was resident or ordinarily resident in the State at the date of his/her death; or
• where the beneficiary is resident or ordinarily resident in the State at the date of the gift.

Property located in the State is liable to gift tax, irrespective of the residence or ordinary residence of the disponer or the donee.

(3) A right to the proceeds of sale of property is deemed to be located in the State to the extent that such property is unsold and situated in the State.

(4) A foreign-domiciled person will not be considered to be resident or ordinarily resident in the State until 1 December 2004 and then only if he/she has been resident in the State for the 5 consecutive tax years preceding that date.

(5)(a) “company” and “share” have the same meanings as they have in section 27; “company controlled by the donee” has the same meaning as is assigned to “company controlled by the donee or successor” by section 27.

(5)(b) A person cannot artificially change the location of Irish assets by transferring them into a foreign, family-controlled private company. The measure operates by deeming the proportion of the value of a share in a foreign company that is directly or indirectly attributable to underlying Irish assets to be property located in the State.

(5)(c) The measure in subsection 5(b) will not apply to a disponer who was foreign-domiciled at all times up to and including the date of the gift, or, in the case of a gift taken after the death of the disponer, up to and including the date of death of that disponer or where the share in question is actually located in the State at the date of the gift.

Relevant Date: Finance Act 2015