Capital Gains Tax (CGT) applies when you sell or dispose of an asset for more than you paid for it. In Ireland, CGT is charged at 33% on the gain, which is one of the higher rates in Europe. Understanding CGT is essential if you own investment property, shares, cryptocurrency, or other assets that may increase in value.
What Is Taxable?
CGT applies to gains on the disposal of most assets, including:
- Investment property (not your home)
- Shares and securities
- Cryptocurrency
- Land and buildings
- Goodwill of a business
- Foreign currency gains (above €1,270)
- Certain personal items worth more than €2,540
The CGT Rate
The standard CGT rate in Ireland is 33%. There is a higher rate of 40% for certain gains related to specified investment products, but the vast majority of disposals are taxed at 33%.
Annual Exemption
Each individual has an annual CGT exemption of €1,270. This means the first €1,270 of gains in any tax year is tax-free. Married couples each have their own €1,270 exemption, giving a combined exemption of €2,540.
How to Calculate Your Gain
The taxable gain is calculated as:
- Sale price of the asset
- Less: original purchase price (cost)
- Less: allowable costs (legal fees, stamp duty, enhancement expenditure)
- Less: inflation relief (indexation) for assets acquired before 1 January 2003
- Less: annual exemption (€1,270)
- = Taxable gain, charged at 33%
Key Exemptions and Reliefs
Principal Private Residence Relief: Gains on the sale of your main home are completely exempt from CGT, provided it has been your principal private residence throughout the period of ownership. If it was rented out for part of the period, a proportional exemption applies.
Entrepreneur Relief: A reduced CGT rate of 10% applies on gains up to a lifetime limit of €1,000,000 on the disposal of qualifying business assets. This is available to individuals who have owned and been involved in the business for a minimum of 3 years in the last 5 years.
Retirement Relief: If you are aged 55 or over and dispose of qualifying business or farming assets, relief may be available. For disposals to family members, there is no upper limit on the value of assets (for those aged 55-65). For disposals to non-family, the limit is €750,000.
Transfers between spouses: Transfers of assets between spouses are not treated as disposals for CGT purposes — no CGT arises.
Payment Deadlines
CGT payment deadlines depend on when the disposal takes place:
- Gains in January to November: CGT must be paid by 15 December of the same year.
- Gains in December: CGT must be paid by 31 January of the following year.
You must also file a CGT return (Form CG1 or as part of your Form 11) by 31 October of the year following the year of disposal.
CGT on Cryptocurrency
Revenue treats cryptocurrency as an asset for CGT purposes. Gains on the disposal of cryptocurrency (including exchanging one crypto for another) are subject to CGT at 33%. Each disposal must be calculated individually, and the FIFO (First In, First Out) method is used to match purchases with disposals.
Losses
If you dispose of an asset at a loss, the loss can be offset against gains in the same year or carried forward to future years. Losses cannot be carried back to earlier years. Note that losses on disposals to connected parties (family members, companies you control) are restricted.
Final Thoughts
At 33%, Irish CGT is not insignificant. If you are planning to sell an investment property, cash in shares, or dispose of other assets, it pays to plan ahead. Consider timing disposals to use your annual exemption, ensure you claim all allowable costs, and explore whether any reliefs apply to your situation.