Written answers

Tuesday, 8 November 2022

Photo of Duncan SmithDuncan Smith (Dublin Fingal, Labour)
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275. To ask the Minister for Finance if there are any plans by Government to incorporate protection for cohabiting couples under inheritance laws; if he is aware of any similar schemes in other EU countries; and if he will make a statement on the matter. [54709/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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For the purposes of capital acquisitions tax (CAT), the relationship between the person who provides a gift or inheritance (the disponer) and the person who receives it (the beneficiary) determines the tax-free threshold (Group Threshold) below which CAT does not arise. Any prior gift or inheritance received by a person since 5 December 1991 from within the same Group Threshold is aggregated for the purposes of determining whether any CAT is payable on a benefit. Where a person receives gifts or inheritances that are in excess of the relevant Group Threshold, CAT at a rate of 33% applies on the excess.   There are three Group thresholds:

- the Group A threshold (currently €335,000) applies, inter alia, where the beneficiary is a child (including adopted child, stepchild and certain foster children) of the disponer;

- the Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, nephew, niece or lineal ancestor or lineal descendant of the disponer.

- the Group C threshold (currently €16,250) applies in all other cases. 

Gifts and inheritances between spouses and civil partners are exempt from CAT.

In the case of long-term cohabitants who are not married or in a civil partnership, the relevant Group Threshold is the Group C threshold, which is €16,250. In addition to this, a CAT exemption may be available in relation to certain gifts and inheritances between long-term cohabitants.

Firstly, where a cohabitant inherits the family home from his or her deceased partner, he or she may be in a position to avail of the dwelling house exemption. To qualify for the exemption, the inherited property must have been the deceased cohabitant’s principal private residence at the date of his or her death. This requirement is relaxed in situations where the deceased person left the property before the date of death due to ill health; for example, to live in a nursing home. The inheriting cohabitant must also have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the house for 6 years after that date.  In addition, the inheriting cohabitant must not have a beneficial interest in another residential property.

In addition to the dwelling house exemption, gifts and inheritances taken by a qualified cohabitant in accordance with a Court Order made under Part 15 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 are exempt from CAT. Part 15 of that Act provides for a redress scheme whereby Court Orders can be obtained in certain circumstances in relation to the transfer of property. A “qualified cohabitant” is a person who has been in a committed and loving relationship with another person for a minimum period of 5 years (or 2 years where they are parents of one or more dependent children), whose relationship has ended due to death or separation and neither of whom was married to and living with another person in 4 of the 5 years immediately prior to the end of the relationship.

Regarding similar schemes in other EU Member States, I am informed by the Department of Justice that it is not possible to have access to the information sought. Inheritance rights differ from country to country across the EU.

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