Credits you can claim against Capital Acquisitions Tax (CAT)
Double Taxation Relief (US)
The convention between Ireland and the US covers inheritance tax in Ireland and federal estate taxes in the US. It does not apply to gift tax. Neither does it apply to any taxes in the nature of death duties, which may be imposed by US states.
The convention provides that Ireland cannot tax foreign situate property, unless the disponer died:
- domiciled in Ireland
- or
- non domiciled in the USA.
Therefore an Irish resident beneficiary is not liable to CAT on a benefit of foreign situate property from a US domiciled disponer.
The amount of the credit cannot exceed the amount of Inheritance tax on the doubly taxed property. The credit given is the lesser of the Irish or US tax on that property.
The US convention contains a code called the “Situs Code”, which applies where the deceased died domiciled in Ireland or the US (or both). The code sets out the rules for determining the situs (location) of different classes of property.
Ireland - USA Convention: Situs Code
| Class of Property | Situs of Property for Taxation |
|---|
|
Immovable property
(such as land and houses)
|
Place it is located
|
|
Tangible moveable property
(such as currency, negotiable bill of exchange, promissory notes)
|
Place where it is located at the time of death or, if in transit, at the place of destination
|
|
Debts due to the deceased, secured or unsecured
(for example, bank accounts, mortgages, dividends, shares in Government or municipal corporations)
|
Place of domicile of the deceased at the time of death
|
|
Shares or stock in a corporation (except Governmental or municipal corporation)
|
Place where or under the law of which the corporation was created
|
|
Policies of insurance and assurance
|
Place of domicile of the deceased at the time of death
|
|
Ships and aircraft (includes shares of these)
|
Place of registration
|
|
Goodwill of business
|
Place where business carried on
|
|
Patents, trademarks and designs
|
Place of registration
|
|
Copyright, franchises and rights of licences to use any copyrighted material, patent, trademark or design
|
Place where the rights are exercisable
|
|
Rights or causes of action ex delicto surviving for the benefit of an estate of a decedent
|
Place where such rights or causes of action arose
|
|
Judgment debt
|
Place where judgment is recorded
|
How do you claim Double Taxation Relief (US)?
If you inherit US property, you can claim a credit against your CAT liability provided you paid US federal estate tax on that property.
Ireland will give credit for tax paid on the US property at whichever is the lower of the US or the Irish tax effective rate.
The credit given cannot exceed the Irish tax paid.
To claim the relief, a CAT return must be filed online through Revenue’s Online Service (ROS) or myAccount. Documentation from the US tax authorities should also be submitted in support of your claim.
A claim for credit (or for a related refund of tax) must be made within six years from the date of the disponer’s death.
Next: Unilateral relief