The old saying goes that there are two certainties in life …. death and taxes.
Well – it seems that in the case of Inheritance Tax (officially known as Capital Acquisition Tax or CAT) , the Irish tax system can make a claim on inheritances from outside Ireland.
In many countries, Inheritance tax is paid out of the Estate of the Deceased person. In Ireland though, the beneficiary is liable for the inheritance tax.
So – in the following circumstances, a beneficiary of an inheritance will be liable for CAT in Ireland :
A) where the deceased person was resident or ordinarily resident in Ireland at the date of the inheritance; or
B) where the beneficiary was resident or ordinarily resident in Ireland at the date of the inheritance ;
An example: Patrick was born in and is resident in the UK. His Irish resident uncle dies leaving him the proceeds of a UK based bank account. Because the deceased was resident in Ireland at the date of the inheritance, Patrick the nephew will be expected to file an Irish tax return and may have a possible a CAT liability to discharge in Ireland. (depending on the amount of the inheritance)
Another example: Michael was born and raised in America but he came to live in Ireland 10 years ago. Michael inherits a house in America from his Aunt Mary who lived all her life in America. The Irish Revenue service will expect Michael, as a beneficiary that was resident in Ireland at the date of the inheritance, to file a tax return.
More Information on Inheritance Tax in Ireland