Individuals resident or ordinarily resident in Ireland are liable to capital gains tax on gains from worldwide disposals. Individuals resident or ordinarily resident, but not domiciled, in Ireland are liable on gains arising on the disposal of assets situated in Ireland and on all other foreign gains to the extent that those gains are remitted to Ireland. Individuals neither resident nor ordinarily resident are liable on gains made on the disposal of certain “specified” assets. Irish resident companies are liable to corporation tax in respect of “chargeable gains” on worldwide disposals while non-resident companies are liable in respect of gains arising from disposals of specified assets.

Rate

The capital gains tax rate is 25%. Lower rates, 15% for a partnership and 12.5% for a company, may apply in relation to deemed chargeable gains arising on the receipt of a “carried interest” being a share of profits in certain venture funds engaged in research, development or innovation activities.

Relief for inflation (indexation)

In arriving at the chargeable gain on the disposal of an asset held for over twelve months,the allowable cost is to be adjusted for inflation based on the consumer price index. Indexation relief applies for the period of ownership of the asset but only up to 31 December 2002. Indexation factors for disposals in 2010 are as follows:

Losses

Losses are set off against chargeable gains arising in the same year. Unused losses may be carried forward indefinitely. Gains on development land may only be offset by losses on development land. Inflation relief may not operate to convert a monetary gain into an allowable loss or to increase a monetary loss.

Exemptions and reliefs

The following exemptions and reliefs are available:

• annual exemption €1,270. For married couples the exemption is €1,270 each (non-transferable)
  
• the gain on the disposal of an individual’s principal private residence; certain restrictions apply where the residence has development potential
• the gain on the disposal of a dwelling home occupied rent free by a dependent
  relative
  
• the gain on sale of Irish government securities, excluding the accrued interest
  portion, where the security has been held for less than two years. The accrued interest portion is charged to income tax
• disposals of individual works of art which are valued at not less than €31,740
  when loaned to an approved gallery or museum for public display for a minimum period of six years
• retirement relief for an individual aged 55 years or more on disposal of business assets owned for ten years or more (which can also include assets held personally but used in the trade). This relief is limited to proceeds of €750,000 where the disposal is not to a child of the individual. A disposal of a business by a qualifying individual to a child is exempt from capital gains tax regardless of the consideration received. For the purpose of this exemption, a “child” includes a nephew or niece who has worked in the business substantially on a full-time basis for the period of five years ending with the disposal, or a child of a deceased child. An individual is not in fact required to retire in order to avail of this relief
• the gain on the transfer of a site from a parent to a child provided it is for the
  construction of the child’s principal private residence and the market value of the site does not exceed €500,000
• exemption from capital gains tax for Irish companies making disposals from substantial holdings in trading companies located in the EU or countries with which Ireland has concluded a double taxation treaty, subject to certain conditions.

Windfall tax

New legislation imposes a special 80% rate of tax on profits or gains accruing to individuals and companies on the disposal of land, to the extent that the profit or gain resulted from the rezoning of the land and the rezoning decision was made on or after 30 October 2009, or where the gain resulted from a decision made on or after 4 February 2010 to grant planning permission for a development that materially contravenes the Development Plan for the area.
There is an exemption from the special 80% rate of tax on the disposal of sites of less than one acre provided the market value of the site at the time of disposal is not greater than €250,000.

Self assessment - payment and returns Individuals

• 31 January 2010 - payment of capital gains tax for disposals made from 1 December 2009 to 31 December 2009
• 15 December 2010 - payment of capital gains tax for disposals made from 1 January 2010 to 30 November 2010
• 31 January 2011 - payment of capital gains tax for disposals made from 1 December 2010 to 31 December 2010
• 31 October 2010 - filing of 2009 return of income (including gains)

Companies

• The payment dates for capital gains tax in respect of gains arising to companies from disposals of development land are the same as the capital gains tax payment dates for individuals
• For disposals of assets other than development land by companies, the
  payment and filing deadlines are as set out in page 4 (see “Corporation tax: Self assessment - payment and returns”).

Contact Us:

Teresa McColgan,  Partner
Price Waterhouse Coopers
Ph: 353 1 792 8613
teresa.mccolgan@ie.pwc.com

Tim O’Rahilly, Partner
Price Waterhouse Coopers
Ph: 353 1 792 6862
timothy.orahilly@ie.pwc.com

Price Waterhouse Coopers
One Spencer Dock
North Wall Quay
Dublin 1
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Telephone: +353 1 792 6000
Fax: +353 1 792 6200
http://www.pwc.com/ie/