Capital Gains Tax in Ireland: rate, exemption, FIFO and losses

What counts as a disposal

CGT is triggered by a disposal, and a disposal is broader than a sale. Transferring an asset, gifting it, or exchanging it for something else can all be disposals, and a disposal can produce a taxable gain without producing any cash.

What matters for a portfolio is that the charge attaches to the date of disposal, not to when the money reaches your account. That date decides which tax year the gain falls into, which payment period applies, and — for funds — which rate applies.

Merely holding an asset that has risen in value is not a disposal. Unrealised gains are not charged to CGT. That principle is one of the places where the fund regime diverges sharply from CGT, since a fund holding can produce a chargeable event after eight years without any sale at all.

How the gain is computed

The chargeable gain is the consideration you received, less what the asset cost you and less the costs of buying and selling it. Revenue allows the acquisition cost, enhancement expenditure that adds value to the asset, and the incidental costs of acquisition and disposal — fees paid to a solicitor or an auctioneer are the examples Revenue itself gives; for a share portfolio the equivalents are commission, exchange fees and stamp duty on purchase.

Where a holding is in a foreign currency, the euro amounts are what matter: the gain is computed in euro, so the exchange rate on the day of purchase and the day of sale both feed into the result.

The rate

Revenue states that the rate of CGT is 33% for most gains. That is the rate applying to shares, securities and most investment assets. A small number of special rates exist for particular asset classes — foreign life policies and certain venture capital funds carry their own rates — and they are worth being aware of only if you hold those specific things.

The rate applies to the taxable gain, meaning after losses and after the personal exemption. It does not vary with your income: CGT is not banded, and a 33% charge falls the same way on a higher-rate and a standard-rate taxpayer.

The €1,270 personal exemption

Each individual has a personal exemption of €1,270 for each tax year. Where the amount you are chargeable on does not exceed €1,270, no CGT arises; where it does, only the excess over €1,270 is charged.

• It is per individual, not per household and not per holding. A married couple or civil partners have one each.
• It is not transferable. If one spouse or civil partner has no gains, the unused portion cannot be moved to the other.
• It does not carry forward. An unused exemption in one year is simply gone at 31 December.
• It is a CGT relief. It has no application to Exit Tax on Irish and EU funds — see the ETF tax guide.

Which shares were sold: FIFO

If you bought the same share on four occasions at four prices and then sold part of the holding, the gain depends entirely on which of those purchases the sale is matched against. Irish law does not let you choose. Revenue's rule is that where you dispose of some of your shares, the oldest shares are treated as being sold first — first in, first out.

FIFO is applied per holding, matching quantity by quantity. A sale larger than the oldest lot spills into the next-oldest, and a sale smaller than it leaves a partial lot behind that carries its original cost forward.

Bonus and rights issues change the arithmetic rather than the ordering. Bonus shares are issued at no cost, so the original cost is spread across the enlarged holding; a rights issue is treated as enhancement expenditure and adds to the base cost.

Losses

A loss on a chargeable asset is generally an allowable loss. Revenue allows you to deduct an allowable loss from chargeable gains made in the same tax year, and where a loss is not used it can be carried forward and used against the next available capital gains in later years.

• Same-year first. Losses realised in a year are set against that year's gains.
• Carried forward without an expiry. Unused allowable losses are not lost at the end of the year; they wait for the next gains.
• Declared to exist. A loss Revenue has no record of is a loss that is difficult to rely on later. Losses are returned on the CGT return for the year in which they arise, even where there is no tax to pay.
• Not every loss is allowable. A loss on an asset that is exempt from CGT is not an allowable loss, and losses inside the fund regimes do not behave as capital losses at all.

A full worked calculation

One holding, three purchases, one partial sale. Illustrative figures, rounded to the cent.

What is not Capital Gains Tax

A large part of an Irish portfolio can look like CGT territory and not be. Three cases account for most of it:

Mixing these pools together is the classic source of a wrong figure — most often by setting a fund loss against a share gain, which the rules do not permit. Vantanomic keeps the pools separate for exactly this reason.

Residence, domicile and spouses

Whether you are charged on gains from anywhere in the world or only on gains from Irish assets depends on your residence, ordinary residence and domicile. Individuals who are resident in Ireland but not domiciled here are subject to a different set of rules again. This guide assumes the ordinary case of an individual resident and domiciled in Ireland; if your position differs, that is a question for Revenue or a qualified professional rather than a calculator.

For spouses and civil partners living together, a transfer of an asset between them does not itself give rise to a CGT charge. The personal exemption, as above, remains individual and cannot be pooled or transferred.

Filing, paying and records

CGT is self-assessed and settled on two separate clocks: payment falls due on 15 December for disposals from January to November and on 31 January for December disposals, while the return declaring those disposals is filed by 31 October of the following year. The deadlines guide works through both, including which return applies and what happens when either date is missed.

What to keep

The gain on a disposal can depend on a purchase made many years earlier, so the records behind it have to survive that long. Contract notes and trade confirmations, fee and commission statements, corporate action notices for splits, bonus issues and rights issues, and foreign exchange rates where a holding was not in euro are all part of supporting a return. Revenue sets the period for which records must be retained — check the current requirement on revenue.ie rather than relying on a figure quoted elsewhere.