1. Rates and Thresholds and dates for payment
 
Capital Acquisitions Tax will be charged a rate of 33% on the taxable value of the gift/inheritance. The taxable value is based on the market value of the assets transferred.
 
The person who receives the property (also called "the transferee" or, sometimes, "the beneficiary", "the successor" or "the disponee") is entitled to receive a certain value known as the “tax free threshold” free from CAT.  The threshold is based on the transferee’s relationship to the person who gives away the property or leaves it in their will (known as "the transferor" or "the disponer").
 
The current thresholds (post 12 October 2018) are set out here.

The Department of Agriculture has recently published answers to a list of frequently asked questions about the transfer of entitlements under the Basic Payment Scheme 2018.

The full list of the department's FAQs and replies is published at the end of this post.

Included in the FAQs is the department’s interpretation and proposed implementation of Statutory Instrument No. 639 of 2017 which came into force on 21 November 2017 (see our blog post of 22 January 2018, Important Changes to European Union (Basic Payment Scheme Inheritance) Regulations 2017). 

How the department proposes to deal with the inheritance of entitlements following the new statutory instrument will depend on whether the owner of the entitlements died before or after 21 November 2017. 

​We have summarized the position below.

• ​where the will does not specifically mention entitlements, the entitlements will transfer with the land unless there is a legal impediment preventing the transfer;

• where the will does not specifically mention entitlements and lands are transferred to a number of beneficiaries, the entitlements will be transferred to the beneficiaries in proportion to the amount of land they each receive under the will. If they receive land in equal shares then they will receive an equal number of entitlements.

 

• ​In all cases, where the will of the deceased bequeaths the entitlements to a particular person, the entitlements will be transferred to that person unless there is some legal impediment preventing it.

• ​where the will does not specifically mention entitlements, the entitlements will form part of the residue of the estate and the residuary legatees will inherit them.

• where the will does not specifically mention entitlements and there are farming and non-farming beneficiaries, the non-farming beneficiaries can do either of the following:

                  a) waive their rights and allow the farming beneficiary to receive the entitlements, or
                  b) apply for a 700 series herd number, take the entitlements and then transfer them to a third party
 

• Again, in all cases, where the will of the deceased bequeaths the entitlements to a particular person, the entitlements will be transferred to that person unless there is some legal impediment preventing it.

 Application of CGT, chargeable persons and rates 

CGT applies in relation to any life time transfer of property including the transfer of a site

CGT is charged on the person who sells or transfers the property.

A charge is applied even if the person who transfers the property is not receiving any consideration or payment in return for it. In such a case the property is deemed to be disposed of at market value and CGT is charged on that value. 

Tax is payable on the difference between the value of the site at the date it was acquired by the transferor and the value it has on the date of the gift to the transferee, at a rate of 33%. 

However, in the case of a transfer of a site from a parent to a child, a CGT exemption is available.
 
 CGT exemption on the transfer of a site from parent to a child
 
If a person transfers land to their child to build a house which is to be the child’s only or main residence, the transferor will not have to pay CGT on the transfer.  
 
In order to qualify for this exemption, the site must be:

• an area of no more than one acre
• with a value of no more than €500,000

​ In addition, the child is required to build a house on the land and occupy that house as their only or main residence for a period of three years.  
 
Clawback of the relief
 
The exemption will be clawed back in circumstances where the child does not comply with the requirements.
 
So, if the child disposes of the site either

• without having built a house on the site

            or

• having built a house on the land, but without having occupied that house as their only or main residence for the full period of at least three years,

then, in such circumstances, the CGT that the transferor parent would have been liable to pay on the transfer to the child if the exemption had not been availed of becomes payable by the child.
 
This clawback does not apply in a situation where the child disposes of the land to a spouse or civil partner.

The Minister for Agriculture has, by way of Statutory Instrument No. 639 of 2017, given effect in Irish law to EU Regulation 1307/2013.
                                 
The Statutory Instrument provides:
 
Where a deceased person bequeaths land in a will and –

• At the time of his or her death held an allocation of payment entitlements under Regulation 1307/2013, and
• made no provision for those payment entitlements in his or her will

such payment entitlements (or share thereof) shall transfer with the eligible land unless there is a legal impediment preventing the transfer.
 
The Explanatory Note to the instrument states:
 
This Statutory Instrument provides legal basis to the Department of Agriculture, Food and the Marine for the inheritance of Basic Payment Scheme entitlements where the will of a deceased farmer is silent in relation to these entitlements. The SI provides for the entitlements to transfer with the land in such circumstances.
 
Thus, the position in regard to an inheritance of entitlements is different under the Basic Payment Scheme than it was under the Single Farm Payment Scheme.
 
The position is that entitlements now transfer with the land unless otherwise specified in the will or unless there is some other legal impediment preventing such a transfer.
 
The Statutory Instrument was executed on 21 November 2017 and published in Iris Oifigiúil on 19 January 2018