My friend has always lived in Ireland
Under the Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003), the inheritance is within the charge to tax as the successor (your friend) is Irish resident or ordinarily resident for tax.
So, under Irish
domestic tax legislation, the inheritance is within the charge to tax.
However, we have a cross border aspect to this inheritance so we also need to consult the Double Tax Agreement (DTA) I referenced earlier.
A DTA can vary the extent of, or even remove, the charge to Irish tax on an individual under Irish domestic law.
Under Article IV of the DTA for inheritance tax, Ireland
cannot tax non-Irish property unless:
- the disponer died whilst domiciled in Ireland,
- the disposition was governed by Irish law, or
- the disponer died non-domiciled in the US.
Surely it is now an Irish asset
The 'situs' of the property is determined according to the rules set out in Article III.
For instance, if it was determined that the deceased was domiciled in the US (for tax purposes) and left your friend some funds from their Bank Account, the funds are a non-Irish asset as the 'situs' of an asset such as a Bank Account is
based on the domicile of the disponer (according to Art III), and if the disponer is US-domiciled for tax, it is not Irish property, it is considered US property. The fact that post-death the attorney transfers funds to your friend in Ireland does not make the situs of the asset Irish.
The potential exemption for a cross-border inheritance under this particular DTA is very valuable in overriding the charge to tax under Irish domestic legislation so in a case such as this, I'd be enquiring:
1. Where was the deceased domiciled for tax, and
2. What class of property was left to your friend.
There is
potential for the DTA exemption to apply here, and, if it does apply, your friend has nothing further to do. No Revenue filing required, no interest charges etc.
Further information is available on Page 79 of Revenue's Guide if you google 'Revenue IT39'.