Tax on foreign donation

D

DonegalTown

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Hello,

My wife is italian and we both live and are tax resident in Ireland. We would like to donate 15.000€ from our Irish bank account to a niece who just turned 21 to help her buying a new car: she is italian, living in Italy, tax resident in Italy. My wife checked with the notary public and also two accountants in Italy and all confirmed the same thing: any sum of money received as a donation from a person not residing in Italy, as long as the sum doesn't originate from an italian financial institution, it attracts no tax in Italy, absolutely nothing. I wonder thought, if it attracts any tax in Ireland ? I don't believe so, which means that the donation would be tax free. Can anyone confirm that no tax is due in Ireland please ?

Thanks
Seamus
 
Hi Seamus.
You can give an Irish person €3000 each year without incurring Irish tax. Each receipient also has a Group B life time gift allowance of €40,000 and a Group C life time allowance of €20,000. A gift from your wife would be treated as Group B (blood relatives) and a gift from you to the niece would be treated as Group C.

Given that your niece is presumably tax resident in Italy, there most likely zero tax liability in Ireland so my paragraph above is probably a moot point.
 
Wow, very generous gift tax exemptions and very low rates in Italy.

Key Italian Gift Tax Exemption Details
  • Spouse and Direct Descendants: €1,000,000 exemption per recipient; 4% tax on the excess.
  • Siblings: €100,000 exemption per recipient; 6% tax on the excess.
  • Other Relatives (up to 4th degree): No exemption; 6% tax rate applied to the total value.
  • Unrelated Individuals: No exemption; 8% tax rate applied to the total value.
  • Disabled Individuals: A specific exemption of €1.5 million applies to beneficiaries with recognized serious disabilities.
  • Business Transfers: Transfers of businesses, company branches, or controlling shareholdings to spouses/descendants are exempt if they commit to holding the interest and continuing the business for at least five years.
  • Dual Exemption System: As of 2025, gift tax exemptions are calculated separately from inheritance tax, potentially allowing double the tax-free transfers.
 
Gifts from Irish residents are subject to CAT, no matter where the recipient lives. CAT applies if the donor, or recipient, is resident in Ireland. It is still payable by the recipient though.

In principle, she has to pay CAT and can offset any Italian taxes paid against it (assuming covered by any double taxation treaty).

In this case, 15k would use her 3k annual small gift exemption and 12k of her lifetime exemption, so the tax liability is zero.

If the gift was 7.5k from each of you, then you can use the small gift exemption twice. In that case, it only uses up 9k of her exemption.

Having said that, it's not clear how revenue would be able to levy the tax at all, since she isn't actually in Ireland. Since there is nothing payable to revenue, it is reasonable that they won't care much.

It only matters if later she gets another gift.

A "withholding" system would be more feasible from revenue. The donor would withhold the tax (say 33% of the gift) and then the recipient could claim back if they have exemptions. That isn't how it works. Any gift tax/exemption is between your niece and revenue.
 
In the case of CAT being due from an inheritance, then I think that the executor must withhold any tax due before paying inheritances over to non-residents
This does not apply to gifts although the donor is obliged to file a return once the 80% threshold is reached
 
jpd said:
This does not apply to gifts although the donor is obliged to file a return once the 80% threshold is reached
Click to expand...
Isn't it the donee/recipient that needs to do that?
And in the case of an individual who has no link to Ireland they are unlikely to bother?
 
I think the donor is supposed to file ...

Filing obligations

This page describes how to file your return and pay your tax when you receive a gift or inheritance
www.revenue.ie www.revenue.ie

Certainly, the executor has to inform Revenue of inheritances
 
Last edited:
Thanks for all the answer's folks. On Purple's comment above, yes it looks like taxes on donations and inheritances in Italy are peanuts compred to ours here. Also the 6% donation tax for "other relatives" is only applied if the money is located in Italy. If it's not located in Italy there is no tax liability. This is what both the accountant and notary public said. Thanks all and have a great weekend.
 
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