Gift vs Inheritance for CAT: Same 33% Rate, Different Valuation Date and the 5% Gift Credit
For Irish Capital Acquisitions Tax (CAT), a gift and an inheritance are taxed at the same 33% rate and draw down the same lifetime group threshold. The real difference is timing: a gift is made during the disponer's lifetime and an inheritance passes on death, so the valuation date is fixed differently — and because the valuation date drives your pay-and-file deadline, the same €100,000 can have very different "tax due by" dates.
The core difference: lifetime vs death
The label matters because Irish CAT law treats the two events differently from the start. A gift is a benefit you receive while the disponer (the person giving) is still alive. An inheritance is a benefit you receive on, or as a result of, the disponer's death. The thing received can be identical — cash, a site, shares, a house — but the legal trigger is either "while they're living" or "because they died."
That single fact cascades into three practical differences that catch people out: the valuation date, the pay-and-file deadline, and which exemptions are even on the table. The rate and the threshold, by contrast, are the same for both. Everything below unpacks that.
The valuation date — and why it changes your deadline
The valuation date is the day on which the market value of the benefit is fixed for CAT, and it is also the day the clock starts for filing and paying. This is where gifts and inheritances genuinely diverge.
- Gift: the valuation date is normally the date of the gift — the day you actually received the benefit. It's usually clean and obvious.
- Inheritance: the valuation date is usually the date the person's representative is entitled to retain the asset for your benefit — in practice often around the grant of probate or administration, not the date of death. A person can die in one year and the valuation date land in the next, once probate is sorted.
Why does that matter for money? Because Ireland uses a single annual pay-and-file deadline of 31 October, and which 31 October you get depends entirely on when your valuation date falls:
| Valuation date falls… | IT38 return due & CAT payable by |
|---|---|
| 1 January – 31 August | 31 October of the same year |
| 1 September – 31 December | 31 October of the following year |
So a gift received on 10 March 2026 (valuation date in the Jan–Aug window) is pay-and-file by 31 October 2026. An inheritance whose valuation date only settles on 4 November 2026 (the Sep–Dec window) is not due until 31 October 2027. Same value, very different timeline — purely because of when the valuation date landed. See Revenue's guidance on completing the IT38 return.
What's identical: the 33% rate and the lifetime group threshold
Both gifts and inheritances are charged at the standard CAT rate of 33% on the taxable value above your tax-free group threshold (the rate has applied to benefits taken on or after 6 December 2012, per Revenue's CAT rates page). Your threshold depends on your relationship to the disponer:
| Group | Relationship to disponer | Lifetime tax-free threshold (since 2 Oct 2024) |
|---|---|---|
| A | Child (incl. certain stepchildren, foster children, minor child of a deceased child) | €400,000 |
| B | Parent (in some cases), sibling, niece/nephew, grandchild | €40,000 |
| C | Everyone else (e.g. cousin, friend, partner who isn't a spouse/civil partner) | €20,000 |
Figures confirmed against Revenue's CAT thresholds page. Each threshold is a lifetime allowance per group, counting all relevant benefits taken since 5 December 1991.
They aggregate together — gifts and inheritances share the same pot
This is the trap that wrecks the "I'll just give it now to avoid inheritance tax" plan. Within a single group, gifts and inheritances aggregate — they add together against the one lifetime threshold. A gift from a parent today uses up the same Group A €400,000 that an inheritance from that parent would later draw on. You do not get a fresh €400,000 for gifts and another €400,000 for inheritances.
The one carve-out worth knowing is the annual small gift exemption: the first €3,000 received from each disponer in a calendar year is exempt and is not counted for aggregation. Per Revenue, this small gift exemption applies only to gifts, not inheritances. So €3,000 a year from each parent (potentially €6,000 to a child from two parents) drips money down tax-free without ever touching the threshold.
The 5% "gift credit" you've heard about
People often ask about the "5% gift difference." It refers to priority right (agricultural/business asset) relief and the small-gift mechanics being more generous on lifetime planning — but the precise statutory point is this: a lifetime gift is computed using the same threshold and 33% rate, and where prior gifts have already been taxed, that tax is credited so you are never taxed twice on the same aggregated value. In practice the planning advantage of gifting early is not a hidden 5% rate cut; it's removing future growth from the estate and locking in today's (often lower) valuation. Treat "5% gift credit" as shorthand for "gifts let you use the small-gift exemption and freeze value early," not a separate rate. When in doubt, model it on the IT38.
Aoife is a daughter (Group A) who has received no prior benefits from her father, Liam. Liam wants her to have €100,000. We compare two routes.
Route 1 — €100,000 gift (lifetime), received 12 February 2026:
- Small gift exemption: first €3,000 is exempt → taxable value = €97,000.
- Group A threshold remaining: €400,000. Taxable value (€97,000) is well below it → CAT due = €0.
- But it still uses up €97,000 of her lifetime Group A allowance (the €3,000 doesn't count). Remaining Group A: €303,000.
- Valuation date 12 Feb 2026 (Jan–Aug window). She must file an IT38 only if cumulative Group A benefits exceed 80% of €400,000 (€320,000) — here they don't, so no return is required yet. If one were, it would be due 31 October 2026.
Route 2 — €100,000 inheritance, Liam dies; valuation date 15 September 2026:
- No small gift exemption (inheritances don't get it) → taxable value = €100,000.
- Group A threshold €400,000 not exceeded → CAT due = €0.
- Uses up €100,000 of lifetime Group A allowance. Remaining Group A: €300,000.
- Valuation date 15 Sep 2026 (Sep–Dec window) → IT38 and any CAT due by 31 October 2027 — a full year later than the gift route's deadline.
The lesson: at €100,000 to a child with no prior benefits, neither route produces a CAT bill — the Group A threshold swallows both. The differences are (a) the gift keeps €3,000 off the lifetime tally, leaving Aoife €3,000 more headroom for the future, and (b) the deadlines land a year apart because the valuation dates fell in different windows. Now imagine Aoife had already used €380,000 of Group A: only the gift route's €3,000 exemption keeps her under the €320,000 / 80% filing trip-wire and trims the eventual 33% bill.
The dwelling-house exemption is (broadly) inheritance-only since 2016
One exemption is a clean dividing line between the two. The dwelling-house exemption can take the family home entirely out of CAT if the beneficiary has lived in it as their only/main home for the required period and meets the other conditions. Since the Finance Act 2016 changes (for benefits taken on or after 25 December 2016), this exemption is, in practice, available only on an inheritance. The narrow exception is a gift to a dependent relative who satisfies the conditions; for everyone else, a gifted dwelling house no longer qualifies. See Revenue's dwelling-house exemption guidance.
This is exactly the kind of detail that reverses a plan: gifting the family home to an adult child during your lifetime can lose an exemption that the same child would have got had they inherited it on death. Always check the dwelling-house conditions before transferring a home.
- Same rate, same threshold: both gifts and inheritances are 33% above the relevant group threshold (Group A €400,000, B €40,000, C €20,000 since 2 Oct 2024).
- Different valuation date: a gift is valued at the date of the gift; an inheritance is usually valued around grant of probate, not date of death.
- Deadline follows the date: valuation date Jan–Aug → pay-and-file by 31 Oct that year; Sep–Dec → by 31 Oct the following year.
- They share one pot: gifts and inheritances aggregate against the same lifetime group threshold — gifting now uses up future inheritance allowance.
- Gift-only perk: the €3,000 annual small gift exemption applies to gifts, never inheritances, and isn't aggregated.
- Inheritance-only perk: the dwelling-house exemption is broadly inheritance-only since 25 Dec 2016 (narrow dependent-relative gift exception).
- File at 80%: an IT38 is required once cumulative benefits in a group pass 80% of its threshold — even with no tax due.
Frequently asked questions
Is a gift taxed at a lower CAT rate than an inheritance in Ireland?
No. Both are charged at the same standard CAT rate of 33% on the taxable value above your group threshold. There is no separate, lower "gift rate." The genuine differences are the valuation date, the resulting pay-and-file deadline, and which exemptions apply.
Do gifts and inheritances each get their own threshold?
No — they aggregate. Within a single group (e.g. Group A for a child), gifts and inheritances add together against one lifetime threshold (€400,000 for Group A since 2 October 2024). A lifetime gift uses up allowance that a later inheritance would otherwise have drawn on.
When is the valuation date for an inheritance?
Usually not the date of death. It is generally the date the deceased's personal representative is entitled to retain the asset for the beneficiary's benefit — in practice often around the grant of probate or administration. For a gift, the valuation date is normally simply the date you received it.
How does the valuation date change my CAT deadline?
Ireland uses a single 31 October pay-and-file deadline. If your valuation date falls between 1 January and 31 August, the IT38 and payment are due by 31 October of that same year. If it falls between 1 September and 31 December, they're due by 31 October of the following year.
Can I use the dwelling-house exemption on a gift of a house?
Broadly, no — since 25 December 2016 the dwelling-house exemption applies to inheritances rather than gifts, except for a gift to a qualifying dependent relative. Gifting the family home to an adult child during your lifetime can forfeit an exemption they'd have received on inheritance.
Does the €3,000 small gift exemption apply to inheritances too?
No. The annual €3,000 small gift exemption from each disponer applies only to gifts, not inheritances, and the exempt €3,000 isn't counted for aggregation against your threshold.
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