Discretionary Trust Tax (DTT)

Initial once-off 6% charge

A discretionary trust becomes liable to the initial once-off 6% charge at the latest of the following dates:

• 25 January 1984
• the date the property becomes subject to the discretionary trust
• the date of death of the disponer
• or
• where there are principal objects of the trust, the date on which the youngest principal object:
  
  • attains 25 years of age, where the property became subject to the trust between 25 January 1984 and 31 January 1993
  • or
  • attains 21 years of age, where the property became or becomes subject to the trust on or after 31 January 1993.

Principal objects are the:

• spouse or civil partner of the disponer
• children of the disponer, or the disponer's civil partner
• children of a predeceased child of the disponer
• children of a child of the disponer's civil partner, where such child predeceased the disponer
• children of the civil partner of a child of the disponer, where such child predeceased the disponer
• or
• children of the civil partner of a child of the civil partner of the disponer, where such child predeceased the disponer.

Children can be named as future beneficiaries of the trust.

Note

Where a discretionary trust is created by a will, the property is treated as being subject to the trust on the disponer’s date of death. 

Reduction in the 6% charge

The 6% charge is reduced to 3% where:

• The entire trust property is appointed out of the trust
• To one or more beneficiary (object) of the trust
• Within 5 years of the 6% charge arising.

How do you claim a refund in respect of the reduced initial charge?

To request a refund of half the initial 6% DTT paid, you should send your request through MyEnquiries or alternatively to the following postal address:

Revenue Commissioners

Capital Acquisitions Tax Unit

Block F

Athy Business Campus

Castlecomer Road

Athy

Co Kildare

R14 FE81

The following information should be submitted with your request:

• Confirmation of the date the trust assets were fully appointed to the beneficiaries of the trust.
• A copy of the deed of appointment, where available.
• The IBAN of the trust bank account.
• The BIC of the trust bank account.

If you wish for the refund to be paid into a different bank account, a signed instruction is required from the trustees.

When to pay and file

The initial 6% charge is payable within four months of the relevant valuation date. The trustee(s) must complete a self-assessment Form IT4 for the 6% Discretionary Trust Tax (DTT) and send it to Revenue with the tax due.

There is a surcharge for late filing of the Form IT4 and interest applies to late payments.

Next: Annual 1% charge