Why a Surviving Spouse Pays €0 CAT: The Full Spousal Exemption and Where It Stops
In Ireland, anything you inherit (or are gifted) from your spouse or civil partner is completely exempt from Capital Acquisitions Tax (CAT) — with no upper limit and no threshold to use up. A widow inheriting a €1.5m estate from her late husband pays €0 CAT and, because the benefit is exempt, has no IT38 return to file. The catch: this exemption applies only to legal spouses and registered civil partners, not to cohabiting couples, and it does nothing for the children when the assets pass down a generation later.
The rule in one line
Under Irish CAT law, a gift or inheritance taken by one spouse or civil partner from the other is exempt from CAT. Revenue states it plainly: "If you receive a gift or an inheritance from your spouse or civil partner, that gift or inheritance is exempt from Capital Acquisitions Tax (CAT)." There is no ceiling — it is not a relief that caps out at €400,000 or any other figure. (Source: Revenue.ie — Exemption on transfers between spouses or civil partners.)
This is fundamentally different from the three "group thresholds" you may have read about. Those thresholds (Group A, B and C) are tax-free allowances that get eaten into and then taxed at 33% on the excess. The spousal exemption is not an allowance at all — it sits before the threshold system and simply takes the transfer out of the CAT net entirely.
| Beneficiary relationship | How it is treated for CAT | Tax-free amount |
|---|---|---|
| Spouse / civil partner | Fully exempt — outside CAT entirely | Unlimited (no threshold) |
| Child (Group A) | Group A threshold, then 33% on excess | €400,000 |
| Sibling, niece, nephew, grandchild (Group B) | Group B threshold, then 33% on excess | €40,000 |
| Cohabitant, friend, cousin, anyone else (Group C) | Group C threshold, then 33% on excess | €20,000 |
Group thresholds shown apply to benefits taken on or after 2 October 2024; CAT rate is 33%. Sources: Revenue.ie — CAT group thresholds and Revenue.ie — CAT rates.
Worked example: a €1.5m estate passing entirely to a spouse
Margaret and Tom, married, Galway. Tom dies in May 2026. His estate is worth €1,500,000 — the family home (€620,000), an investment fund (€480,000), a deposit account (€310,000), and a car plus contents (€90,000). Tom's will leaves everything to Margaret. They have two adult children, but the children receive nothing from Tom's estate at this stage.
Step 1 — Identify the benefit. Margaret takes an inheritance of €1,500,000 from her spouse.
Step 2 — Apply the spousal exemption. Because Tom and Margaret were legally married, the entire inheritance is exempt from CAT. The €400,000 Group A threshold is irrelevant here — it is for children, not the surviving spouse, and the exemption applies regardless of value.
Step 3 — Calculate the tax. Exempt value €1,500,000 → taxable value €0 → CAT due = €0.
Step 4 — The IT38 question. An IT38 self-assessment return is only required once the taxable value of what you receive in a group exceeds 80% of that group's threshold. A fully exempt spousal inheritance has a taxable value of €0, so it is well under any 80% trigger — Margaret has no IT38 to file on this inheritance. (Filing rule: Revenue.ie — IT38 filing obligations.)
Result: €1.5m moves to Margaret with €0 CAT and no CAT return. The probate process still has to happen to transfer legal title, but there is no Capital Acquisitions Tax charge.
Notice what the exemption did not require: no use of Margaret's own thresholds, no apportionment between assets, no relief claim to argue. The transfer simply never enters the CAT computation. That is the power of an exemption over a relief.
Where it stops 1: cohabitants are not spouses
This is the single most painful gap in Irish inheritance tax, and it catches couples every year. The spousal exemption applies only to people who are legally married or in a registered civil partnership. A long-term cohabiting partner — no matter how many years together, how many shared children, or how clearly it was "their" home — does not qualify.
For CAT, an unmarried partner falls into Group C, the "stranger in blood" group, with a tax-free threshold of just €20,000. Everything above that is taxed at 33%.
Aoife and Conor, cohabiting 14 years, Cork — never married. Conor dies and leaves Aoife the home and savings worth €1,500,000, the same value as Margaret's inheritance above.
Group: C (cohabitant). Threshold: €20,000.
Taxable value = €1,500,000 − €20,000 = €1,480,000.
CAT at 33% = €1,480,000 × 0.33 = €488,400.
Same €1.5m, same home, same couple in everything but a marriage certificate — and the bill is €488,400 instead of €0. (A separate Dwelling House Exemption can sometimes shelter the home itself for a qualifying cohabitant who has lived there long enough and owns no other home — but it is conditional, applies only to the dwelling, and does nothing for the €480,000 fund or the savings. It is not a substitute for the spousal exemption.)
The €488,400 figure is exactly why estate planning conversations for unmarried couples in Ireland so often end with two options: marry/register a civil partnership, or build a plan around life cover and the Dwelling House Exemption. There is no version of the spousal exemption that reaches a cohabitant.
Where it stops 2: the next generation uses Group A
The exemption buys time, not permanence. When the surviving spouse later dies and the assets pass to the children, the spousal exemption is gone — the children are not spouses of the second parent in any special CAT sense; they are children, and they use the Group A threshold of €400,000 each, with 33% on the excess.
Continuing the Margaret/Tom case. Margaret dies in 2031. Her estate (now €1,500,000, ignoring growth for simplicity) is split equally between their two children, €750,000 each. Assume neither child has had prior Group A benefits.
Per child: €750,000 − €400,000 (Group A) = €350,000 taxable.
CAT at 33% = €350,000 × 0.33 = €115,500 per child.
Total CAT across both children = €231,000.
The same €1.5m that passed to Margaret tax-free is now taxed when it reaches the children — because the spousal exemption only ever covered the spouse-to-spouse step.
This is why advisers describe the spousal exemption as a deferral at the family level. Married couples often leave everything to each other first because it is clean and tax-free — but the real CAT planning (using both parents' Group A thresholds, lifetime gifting, the €3,000 annual small gift exemption per child per parent, and reliefs like Agricultural or Business Relief) is about managing the eventual hand-down to the children, not the transfer between the spouses.
How the Succession Act legal right share interacts
The Succession Act 1965 gives a surviving spouse or civil partner a guaranteed minimum share of the estate, called the legal right share, which a will cannot override:
- No children: one-half (½) of the net estate.
- Children surviving: one-third (⅓) of the net estate.
(Source: gov.ie — Succession rights in Ireland.) If a will leaves the spouse less than this, the spouse can elect to take the legal right share instead of the will gift. If the deceased died without a will (intestate), the spouse's intestacy share is even more generous: two-thirds where there are children, the whole estate where there are none.
Here is the crucial tax point: whatever the spouse receives under the legal right share is still a transfer from spouse to spouse, so it is still fully CAT-exempt. The Succession Act decides how much the spouse is legally entitled to; the CAT exemption decides that none of it is taxed. The two systems work in parallel — one is succession law (who gets what), the other is tax law (what it costs).
Seán's will under-provides for his spouse. Seán dies leaving a €900,000 estate. His will leaves his spouse Bríd only €150,000 and the rest to a sibling. They have children, so Bríd's legal right share is one-third = €300,000.
Bríd elects the legal right share, so she takes €300,000 instead of €150,000. As a spousal transfer, that €300,000 is fully exempt from CAT — €0 due. The sibling, in Group B (threshold €40,000), is taxed at 33% on the part of their benefit above €40,000. The legal right share moved value away from a taxed beneficiary (the sibling) and into a fully exempt one (the spouse) — improving the family's overall position without any relief claim.
- Spouse/civil partner = €0 CAT, unlimited. Transfers between legal spouses and registered civil partners are fully exempt, with no threshold and no cap — confirmed by Revenue.
- No taxable value usually means no IT38. A fully exempt spousal inheritance has a taxable value of €0, below the 80%-of-threshold filing trigger, so generally no CAT return is required for it.
- Cohabitants get nothing here. Unmarried partners fall into Group C (€20,000 threshold); a €1.5m inheritance can attract roughly €488,400 of CAT where a spouse would pay €0.
- The children pay later. When assets pass down, each child uses the Group A €400,000 threshold and 33% above it — the exemption deferred CAT to the next generation, it did not delete it.
- Succession Act ≠ CAT. The legal right share sets the spouse's minimum entitlement (½ no children, ⅓ with children); whatever the spouse takes under it is still spousal and still fully CAT-exempt.
FAQ
Is there any limit on the spouse exemption — does it stop at €400,000?
No. The €400,000 figure is the Group A threshold that applies to children. The spouse/civil partner exemption has no threshold and no upper limit — a transfer between spouses is fully exempt from CAT regardless of value, per Revenue.ie.
Does a surviving spouse have to file an IT38 if everything is exempt?
Generally no. An IT38 is required when the taxable value of benefits in a group exceeds 80% of that group's threshold. A fully exempt spousal inheritance has a taxable value of €0, so it does not breach that trigger. Always check whether any non-exempt benefit was also received, and confirm with your solicitor or tax adviser. See Revenue's filing obligations.
We've lived together 14 years but never married — do I get the exemption?
No. The exemption applies only to legal spouses and registered civil partners. A cohabitant falls into Group C with a €20,000 threshold and 33% above it. A qualifying cohabitant may be able to use the separate, conditional Dwelling House Exemption for the home, but that does not cover other assets and is not the spousal exemption.
If everything passes to my spouse tax-free, will my children avoid CAT too?
No — the exemption only covers the spouse-to-spouse step. When the surviving spouse later dies and assets pass to the children, each child uses the Group A €400,000 threshold and pays 33% on anything above it. Planning for the children's eventual CAT is a separate exercise.
What is the legal right share and does it change the tax?
Under the Succession Act 1965, a surviving spouse or civil partner is entitled to a minimum share a will cannot defeat: one-half of the estate where there are no children, one-third where there are children. It determines how much the spouse receives, but it does not change the CAT treatment — whatever the spouse takes is still a spousal transfer and still fully exempt. See gov.ie — Succession rights in Ireland.
Does the exemption apply to gifts during life, or only inheritances on death?
Both. Revenue's exemption covers gifts and inheritances between spouses and civil partners, so lifetime transfers between them are also exempt from CAT (different rules can apply to other taxes such as stamp duty or Capital Gains Tax on certain assets, so take advice on the wider picture).
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