Michael Cahill (Kerry, Fianna Fail)
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391. To ask the Minister for Finance to consider as a solution to the capital acquisition tax issue (inheritance) to classify the next-of-kin (details supplied) to be automatically promoted to ‘child status’ when it arises; the estimated cost of such a measure in view of the obvious discrimination given the drop from €400 thousand to €40 thousand in the allowance is incredibly big; and if he will make a statement on the matter. [61738/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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CAT is a beneficiary-based tax on gifts and inheritances that is payable on the value of the property received. For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. There are three Group thresholds:

- the Group A threshold (currently €400,000) applies where the beneficiary is a child of the person giving the gift or inheritance

- the Group B threshold (currently €40,000) applies where the beneficiary is a brother, sister, nephew, niece, lineal ancestor or lineal descendant of the person giving the gift or inheritance

- the Group C threshold (currently €20,000) applies in all other cases.

My officials have examined Capital Acquisitions Tax as part of the annual Tax Strategy Group exercise. The resultant papers outlined the tax policy considerations for the Government and the options available to it in forming this year’s Budget.

The Deputy is proposing that a "next of kin" beneficiary could be nominated if a disponer is without children and is asking for the costs associated with the proposal. This essentially would uplift some Group B beneficiaries to €400,000. Revenue estimated a cost of uplifting Threshold B of approximately €305 million. However, due to difficulties in costing the combining of Thresholds A and B, and the fact that the proposal by the Deputy would not uplift all Group B beneficiaries to Group A, the true cost may be lower, however this cannot be demonstrated at this time.

A link to this year’s paper on Capital Taxes can be found here www.gov.ie/en/department-of-finance/collections/budget-2026-tax-strategy-group-papers/.

Finally, it is important to be aware that the options available for setting CAT thresholds must be balanced against competing demands, and as part of the annual Budget and Finance Bill process.

Barry Ward (Dún Laoghaire, Fine Gael)
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392. To ask the Minister for Finance further to Parliamentary Question No. 455 of 4 November 2025, his views on the whether the local property tax is equitable given that it is based on property value rather than income; if he is concerned that it is overburdensome on people that live in high value properties with comparatively low income; and if he will make a statement on the matter. [61760/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Local Property Tax (LPT) was legislated for in 2012 in the Finance (Local Property Tax) Act 2012. The design of LPT was considered by an interdepartmental group chaired by Dr. Don Thornhill. As part of their terms of reference, the group were asked to “consider the design of a property tax to replace the household charge and that is equitable and is informed by previous work and international experience.”

In considering the equity of a property tax, the report of the group noted that owners of more valuable properties would pay more under a market value-based tax. The report noted this was equitable to the extent that market value provides a measure of the value of a residential property to the owner, particularly in terms of its proximity to places of work and local amenities and facilities.

Furthermore, in 2019, an interdepartmental also conducted a review of LPT. Their report noted that when viewed as a capital tax, property tax can be considered progressive since capital tends to be more heavily concentrated in the hands of higher income earners. It also noted that taxes that are based on incomes tend to bring about behavioural change. In contrast, property taxes apply to a base that is largely immovable and broadens the tax base.

As outlined in my response to Parliamentary Question No. 455 of 4 November 2025, there are provisions in place to support those that have difficulty in meeting their LPT liabilities, including those who may live in a high value property with a comparatively low income.

Homeowners have the possibility of deferring the charge to LPT in certain circumstances. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral, 100% of the liability can be deferred. Where a person qualifies for partial deferral, then 50% of the liability can be deferred. The balance of 50% of the tax must be paid. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is charged at 3% per annum on the deferred amount. Further information regarding the deferral of LPT is available on the Revenue website at: www.revenue.ie/en/property/local-property-tax/deferral-of-payment/index.aspx

For the LPT valuation period 2026-2030, the income threshold for a single person to qualify for a full deferral is €25,000, and for a partial deferral is €40,000. For a couple, the income threshold to qualify for a full deferral is €40,000, and for a partial deferral is €55,000.

It is also possible to apply for a deferral on the grounds of hardship where a person suffers an unexpected and unavoidable significant loss or expense, as a result of which a person cannot pay their LPT liability without suffering financial hardship.

Any property owners experiencing difficulties can avail of a wide range of flexible payment options both in respect of their LPT liabilities and for any previous years where liabilities remain outstanding. The full range of payment options, which includes phased arrangements, are available to property owners on the Revenue website at: www.revenue.ie/en/property/local-property-tax/paying-your-lpt/index.aspx.

For these reasons, it is my view that it is appropriate for LPT to be calculated on the basis of property value rather than income.

Ann Graves (Dublin Fingal East, Sinn Fein)
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393. To ask the Minister for Finance to consider entering discussions with the childcare provider groups and for the issue of VAT and rates to be looked at with regard to be VAT neutral as opposed to being VAT negative (details supplied). [62040/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they are either specifically exempt from VAT or they fall within the categories listed in Annex III of the Directive, to which Member States may apply lower VAT rates subject to certain rules.

In compliance with the Directive Ireland applies a VAT exemption to the provision of childcare services. This means that childcare providers do not register for VAT, do not charge VAT on the supply of the supply of their services and, consequently, have no VAT recovery entitlement on their input costs.

This VAT exemption ensures that childcare providers are not required to add VAT onto the price they charge their customers. There is no discretion under the Directive to disapply the VAT exemption from the supply of childcare services. There is also no discretion under the Directive to introduce a new tax provision to relieve childcare providers of VAT that they incur in the course of their business.