To Gift or not to Gift

As Ireland begins to count the cost of tackling the COVID-19 pandemic, it is clear that the cost of supporting citizens and business will have to be financed, and tax measures will play their part.

As Ireland begins to count the cost of tackling the COVID-19 pandemic, it is clear that the cost of supporting citizens and business will have to be financed, and tax measures will play their part.

It has already been mooted (Irish times article of 5 May) that changes to wealth driven taxes are on the cards in next October’s budget, or possibly earlier if an emergency budget is required when the new government is formed.  In particular, tax rates applicable to Gift Tax, Inheritance Tax and Capital Gains Tax could be increased. In addition, existing tax reliefs such as retirement relief, entrepreneur relief etc could be curtailed or removed.

The pandemic has caused stock market turmoil and other asset classes have seen a material drop in value.

Accordingly, with the prospect of increased taxes in the future and lower asset values, now is the opportune time to consider making gifts in a tax-efficient manner.

Benefits to Donor

It is possible that assets which would have realised a gain (had they been transferred earlier in the year) leading to Capital Gains Tax ("CGT"), can now be passed at a lower tax cost.

Given the rate of CGT could be increased in the next Budget, higher tax costs are likely to arise, should the transfer of assets be delayed.

Crystallising losses on assets to shelter gains should also be considered. In the current climate, it is possible that a loss could be generated on the passing of assets.  However, it is important to remember that all assets are not created equal when it comes to their tax treatment, e.g. losses on disposal of offshore funds cannot be used to shelter CGT on other assets.

We recommend a CGT review should be undertaken, to ensure a tax efficient transfer of assets.

Benefits to Recipient

The recipient will acquire the asset at a lower value and lower associated tax cost due to taking advantage of lower existing inheritance tax rates and whatever tax reliefs are currently available.  They will also benefit from the income and future growth of the assets which they receive.

Where concern exists that the recipient may be too young or inexperienced to receive the asset now, or where asset protection is on your mind, we can advise on a structure which would allow you retain some control over the management of the assets, while enabling the recipient to secure future benefits from asset ownership.  We typically recommend the use of an appropriate Trust or Family Partnership structure to assist clients in this situation.

Please contact our experts in this area (see details below) over the coming months to develop and implement a plan before the coming Budget in October.

Please note: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

Warren & Partners are a boutique Irish tax and business advisory firm based in Ballsbridge, Dublin. Our experienced-team of tax advisors will create unique tax solutions for your specific business needs.

Get in touch

with our experts for To Gift or not to Gift

Anthony O’Callaghan
Anthony O’Callaghan

Senior Tax Manager

Fergus McCarthy
Fergus McCarthy

Specialist in Trust & Estate Planning



See what’s on our minds

Budget 2021 Announcement

Minister for Finance, Paschal Donohoe, today announced a €17.75bn budget package for 2021. We have highlighted below some of the key measures outlined in today's budget speech.

Read More

Employment Wage Subsidy Scheme (EWSS)

As part of the July stimulus package, the Government has announced that the Temporary Wage Subsidy Scheme (TWSS) is to be phased out and replaced by the EWSS.

Read More

July Jobs Stimulus - Tax Relief for Business Owners

On 23 July 2020, the Government announced the July Jobs Stimulus which aimed to provide financial support to Irish individuals and companies adversely affected by the Covid-19 pandemic. We have summarised below details of the key tax reliefs that have been introduced in this package.

Read More