Declan, who was resident in Ireland, died in 2020 and left his entire estate to his Irish resident nephew, Thomas. Declan’s estate comprised Irish property valued at €425,000 and property in Country B valued at €200,000. Country B does not have a Double Taxation Treaty in place with Ireland. Thomas has no Group B tax-free threshold available to him. Country B charges tax at a rate of 40%.
Calculation of Irish CAT due on foreign property
|Country B tax paid @40%
|Irish CAT @33%
|Less unilateral relief for Country B tax paid
|Less available Group B tax-free threshold
|Net Irish CAT due on foreign property
In this case, credit is restricted to the amount of Irish CAT paid. The tax paid in Country B is greater than that in Ireland. The credit given cannot be greater than the amount of Irish tax paid on the foreign property.