Tax Free Gift Ireland: What You Can (Legally) Gift & How To Plan It For Your Business

Business owners often assume gifts between family members are automatically tax-free. They’re not. Handing an adult child €10,000 at Christmas without understanding Capital Acquisitions Tax rules can trigger a tax liability that reduces the actual benefit by thousands of euro. This misconception about family gifts being exempt from tax is one of the most common mistakes I see.

The reality about tax free gifts in Ireland rules is that they’re more specific than most people realise. Yes, you can give tax-free gifts. Yes, there are legitimate ways to reward employees, help family members, and reduce your tax burden through strategic gifting. But there are also specific limits, documentation requirements, and traps that catch people out constantly.

I’ve worked with Irish business owners for over a decade, and gifting comes up repeatedly. Directors want to reward staff without triggering tax bills. Parents want to help adult children buy homes. Business owners want to transfer shares to family members efficiently. Everyone wants to know: how much can I give without creating a tax problem?

The small gift exemption is one of the most useful tax planning tools available in Ireland, but it’s also one of the most misunderstood. The €3,000 annual exemption seems straightforward until you start asking questions. Can you give €3,000 to each child? What about employees? Does it apply to shares or just cash?This guide covers everything you actually need to know about gift tax Ireland rules in 2025: what qualifies as tax-free, who pays the tax, how to use gifting strategically, and the documentation you need to keep Revenue happy.

Understanding Gift Tax In Ireland

Before we get into exemptions and strategies, you need to understand how gift tax in Ireland actually works.

What is Capital Acquisitions Tax (CAT)?

Capital Acquisitions Tax is the tax charged on gifts and inheritances you receive. It applies when the total value of gifts and inheritances you’ve received from a particular group of people exceeds certain thresholds.

Key points:

• CAT applies to both gifts (during someone’s lifetime) and inheritances (after death)
• The same thresholds apply to combined gifts and inheritances
• Different thresholds based on your relationship to the giver
• Current CAT rate: 33% on amounts above the threshold

Who Pays Gift Tax: The Giver or the Receiver?

In Ireland, the recipient pays gift tax, not the giver.

What this means:

• If you give your daughter €50,000, she’s responsible for any CAT liability
• If you give employees bonuses or gifts, they may face tax consequences
• The giver doesn’t get a tax deduction for making gifts
• The giver doesn’t face income tax on giving gifts

Exception: if you agree to pay the recipient’s CAT liability as part of the gift, that payment itself counts as an additional gift.

CAT Thresholds and Groups

CAT thresholds depend on your relationship to the person giving the gift.

• Group A: €335,000 threshold (2025) Parents to children or children to parents
• Group B: €32,500 threshold (2025) Grandparents, siblings, nieces, nephews, grandchildren
• Group C: €16,250 threshold (2025) All other relationships

How it works: You can receive up to the threshold amount tax-free over your lifetime from people in each group. Once you exceed the threshold, you pay 33% CAT on the excess.

Example: Your parents give you €50,000. You’ve never received gifts before.

• Group A threshold: €335,000
• Gift value: €50,000
• Tax due: €0 (still within threshold)
• Remaining threshold: €285,000

The thresholds are cumulative over your lifetime. Every gift and inheritance from people in each group counts towards your total.

The €3,000 Small Gift Exemption Explained

Right, here’s the exemption most people have heard about but don’t fully understand.

What Qualifies for the Small Gift Exemption?

You can receive gifts up to €3,000 per year from any person completely tax-free. These gifts don’t count towards your CAT thresholds at all.

Key characteristics:

• €3,000 limit per donor per calendar year
• Completely outside the CAT system
• Doesn’t erode your lifetime CAT thresholds
• Applies to cash and non-cash gifts
• Resets every calendar year (1 January)

What this means practically: If someone gives you €3,000 in December and another €3,000 in January, both are tax-free because they’re in different calendar years.

Can Multiple People Gift €3,000 Each?

Yes! This is where the small gift exemption becomes powerful.

Each person can give you €3,000 annually tax-free. You could receive:

• €3,000 from your mother
• €3,000 from your father
• €3,000 from your grandmother
• €3,000 from your aunt
• €3,000 from a friend

Total: €15,000 completely tax-free in one year.

None of this affects your CAT thresholds. It’s genuinely tax-free money that doesn’t reduce your future inheritance allowances.

How Often Can You Give a Tax-Free Gift?

Once per calendar year per recipient. The exemption resets on 1 January.

Strategic timing: Give €3,000 on 20 December 2024 and another €3,000 on 10 January 2025. That’s €6,000 over three weeks, all tax-free.

10-year example: Parents giving adult children €3,000 each annually:

• Two parents, two children
• €3,000 x 2 parents x 2 children = €12,000 annually
• Over 10 years: €120,000 transferred tax-free
• No impact on CAT thresholds

This is legitimate tax planning. Revenue explicitly allows this.

Gifting As A Tax Strategy For SMEs

Let’s talk about how tax free gifts in Ireland rules apply specifically to business owners.

When Can Businesses or Directors Make Tax-Free Gifts?

Gifts to family members: The €3,000 small gift exemption applies whether you’re giving as an individual or as a business owner. Standard rules apply.

Gifts to employees: Different rules entirely. This falls under employment taxation, not CAT.

Gifting to Employees: The Small Benefit Exemption

The Small Benefit Exemption allows employers to give employees benefits worth up to €1,500 annually (increased from €1,000 in 2024) completely tax-free.

Rules:

Must be non-cash: Cannot give cash or cash vouchers that can be exchanged for cash. Gift cards for specific retailers are generally acceptable.

Annual limit: €1,500 per employee per year.

All employees must be offered: Cannot discriminate – must be available to all staff or all staff in a particular category.

Cannot replace salary: Cannot replace salary or contractual entitlements.

Qualifying benefits:

• Retail vouchers (e.g. One4All or CleverCards)
• Gift cards for restaurants, spas, experiences
• Tickets to events
• Hampers or gift boxes

Non-qualifying benefits:

• Cash
• General cash vouchers
• Salary sacrifice arrangements

Example for e-commerce business: You employ 8 staff. You give each employee €1,500 in retail vouchers.

Total cost: €12,000, completely tax-free. No income tax, USC, or PRSI for employees. No employer PRSI for you.

If you’d paid this as salary, it would have cost roughly €18,000 after employer PRSI, and employees would have received less after their taxes.

Common Tax Traps Business Owners Should Avoid

• Trap 1: Giving cash disguised as gifts Revenue scrutinises large cash gifts. If you’re claiming a €50,000 gift to your child is exempt, they’ll investigate. Stay within actual limits.
• Trap 2: Backdating gifts You cannot backdate gifts for tax purposes. The gift occurs when it’s actually made.
• Trap 3: Conditional gifts If you give shares or assets with strings attached, Revenue may view this as not a genuine gift.
• Trap 4: Poor valuation Non-cash gifts must be valued properly. Undervaluing assets to stay within exemptions creates problems.
• Trap 5: Mixing business and personal If gifting business assets, proper documentation separates business decisions from personal tax planning.

What Counts As A Gift?

Not everything that feels like a gift is treated as a gift for gift tax Ireland purposes.

Cash Gifts, Vouchers, and Digital Transfers

• Cash: €3,000 cash qualifies for small gift exemption. Larger amounts count towards CAT thresholds.
• Bank transfers: Treated identically to cash.
• Vouchers (for employees): Must be non-cash vouchers for specific retailers.
• Vouchers (for family): Count as gifts at face value.
• Digital payments: Revolut transfers, PayPal—all treated as cash for tax purposes.

Non-Cash Gifts: Shares, Property, Business Assets

• Company shares: Count as gifts at market value on the date of transfer.
• Property: Residential or commercial property counts at market value.
• Business assets: Equipment, stock, intellectual property – all count at market value.

How Revenue Values Non-Cash Gifts

For tax free gift Ireland purposes, Revenue uses market value at the date of the gift.

Market value definition: The price the asset would fetch in an open market sale between unconnected parties.

Valuation methods:

• Property: Professional valuations, recent comparable sales
• Shares in private companies: Accountant valuations based on assets, earnings
• Shares in public companies: Market price on date of transfer

Important: You cannot artificially reduce value to fit within exemptions. Revenue challenges undervaluations routinely.

If you’re gifting non-cash assets worth over €10,000, get professional valuations.

How To Use Gifting Strategically In Tax Planning

Here’s where tax free gifts in Ireland rules become genuinely useful for wealth and business planning.

Lifetime Planning: Maximising Exemptions Across Years

The €3,000 small gift exemption resets annually. Used strategically over decades, it transfers significant wealth tax-free.

20-year gifting plan example: Parents (2 people) gifting to two adult children:

• €3,000 per parent per child annually
• 2 parents x 2 children x €3,000 = €12,000 per year
• Over 20 years: €240,000 transferred completely tax-free

None of this touches the €335,000 CAT threshold per child. You could still gift or leave each child €335,000 more without any CAT liability.

Timing matters: Start gifting as early as possible. The longer the timeframe, the more wealth you transfer tax-efficiently.

Structuring Gifts Within Family Businesses

Many Irish SMEs are family businesses. Transferring ownership requires careful planning.

Share gifting strategy:

• Value shares professionally
• Gift shares annually using small gift exemption (€3,000 worth per year)
• Larger transfers use CAT thresholds
• Combine with business relief (90% reduction on qualifying business assets)

Example for agency succession: Business worth €600,000. Two children will eventually take over.

Strategy:

• Gift small amounts of shares annually using exemptions
• Over 10-20 years, gradually transfer ownership
• Use business relief and CAT thresholds for final transfer

This gradually transfers ownership, maintains control during transition, and minimises tax.

Avoiding Threshold Erosion

Your CAT thresholds are lifetime limits. Use them wisely.

Monitor cumulative gifts: Track every gift and inheritance from each group.

Don’t waste exemptions: Structure large transfers to maximise small gift exemptions first.

Example: Your grandmother wants to give you €35,000 (Group B threshold is €32,500).

If given as lump sum:

• First €3,000: small gift exemption
• Remaining €32,000: uses most of Group B threshold

If structured annually:

• €3,000 annually for 11 years
• Final €2,000 the last year
• Result: €35,000 transferred completely tax-free with zero threshold impact

Combining with Inheritance Planning

Tax free gifts in Ireland strategies work best as part of overall estate planning.

Integrated approach:

• Use annual small gift exemptions to reduce estate value during lifetime
• Plan larger gifts strategically within CAT thresholds
• Structure wills to use remaining thresholds efficiently
• Consider business relief where applicable

Our tax services include estate and succession planning specifically for Irish business owners.

Documentation And Compliance Tips

Revenue takes gifting seriously. Proper documentation protects you during audits.

What Records Should You Keep?

For all gifts:

• Written records of gift amount and date
• Bank statements showing transfers
• Valuations for non-cash assets
• Correspondence about the gift

For employee gifts:

• Records of benefits provided to each employee
• Receipts and invoices
• Proof benefits meet Small Benefit Exemption criteria

For business asset gifts:

• Professional valuations
• Share transfer documents
• Company resolutions

How long to keep records: Minimum six years. For significant gifts affecting CAT thresholds, keep them permanently.

If you’re using Xero or other accounting software, create specific tracking for employee benefits.

How and When to File with Revenue

• Small gifts under €3,000: No filing requirement.
• Gifts exceeding small gift exemption: Recipient must file CAT return (Form IT38) if total gifts/inheritances exceed 80% of relevant threshold.
• Filing deadline: Within four months of the valuation date (or 31 October in the year after receiving the gift).

Late filing penalties:

• 5% surcharge if filed late but before Revenue enquiry
• 10% surcharge if filed after Revenue enquiry
• Interest on late payment (currently 8% per annum)

Red Flags to Avoid

Red flag 1: Multiple small gifts from one person in one year €1,000 in January, €1,000 in June, €1,000 in December looks like you’re trying to disguise a €3,000 gift.

Red flag 2: Backdated documentation Creating paperwork years after gifts were made creates problems.

Red flag 3: Circular transactions Parent gives child €50,000. The child immediately gives it back. Revenue investigates these.

Red flag 4: Undervalued non-cash assets Claiming shares or property are worth half their actual value. Revenue checks valuations.

Cross-Border Gifting

Gift tax in Ireland rules apply based on domicile and location of assets.

Tax Implications for Non-Resident Recipients

Irish CAT applies if:

• The person giving the gift is Irish resident or domiciled
• The person receiving the gift is Irish resident or domiciled
• The asset gifted is located in Ireland

Even if your child lives in London, if you’re Irish domiciled and give them cash or Irish assets, Irish CAT rules apply.

How Ireland Determines Tax Residence

Domicile matters more than residence for CAT purposes.

You’re domiciled in Ireland if:

• You were born here and haven’t established permanent home elsewhere
• Your father was Irish domiciled when you were born
• You’ve been Irish resident for 5+ consecutive years

Domicile is sticky. Moving abroad doesn’t automatically change domicile.

Tax-Free Gifts: Real Scenarios

Let’s break down practical examples.

Gifting €3,000 to Adult Children

Scenario: Help your daughter with a house deposit.

Approach:

• You gift €3,000
• Your spouse gifts €3,000
• Both repeated annually for 3 years
• Total: €18,000 over 3 years, completely tax-free

Tax impact: Zero. Daughter’s CAT threshold remains intact for future inheritance.

Employee Rewards Under €1,500

Scenario: Marketing agency rewards staff at Christmas.

Option 1: Cash bonus €1,000 cash to each of 10 employees.

• Employees pay income tax, USC, PRSI (€400-500 in tax)
• Employees net €500-600
• You pay employer PRSI
• Total cost: €11,100
• Employee benefit: €5,000-6,000

Option 2: Small Benefit Exemption €1,000 retail gift cards to each employee.

• Employees pay zero tax
• Total employee benefit: €10,000
• You pay no employer PRSI
• Total cost: €10,000

Option 2 saves you €1,100 and gives employees nearly double the benefit.

Gifting Company Shares to a Spouse

Scenario: You own 100% of your tech company. You want to give your spouse 25%.

Tax treatment:

• Spouses are Group A for CAT (€335,000 threshold)
• If shares worth €100,000, first €3,000 covered by small gift exemption
• Remaining €97,000 uses part of spouse’s CAT threshold
• No immediate tax (within threshold)

Why do this?

• Split dividends between two people
• Income splitting for income tax purposes
• Estate planning benefits

This requires proper planning and documentation.

When To Get Professional Advice

Some gifting situations are straightforward. Others need expert input.

Complex Situations Requiring Advice

Get professional advice if:

• Gifting business shares or assets
• Setting up trusts
• Transferring property
• Gifts worth over €20,000
• Cross-border gifting
• Combining gifts with inheritance planning

The cost of professional advice (typically €500-2,000) is small compared to the cost of mistakes (often tens of thousands).

How Around Finance Helps

We help business owners structure gifting strategies that:

• Maximise tax-free transfers within legal limits
• Document everything properly for Revenue compliance
• Integrate with business succession planning
• Use available reliefs fully

Start Gifting Strategically

Tax free gifts in Ireland rules provide genuine opportunities for tax-efficient wealth transfer and employee rewards. The €3,000 small gift exemption, combined with CAT thresholds and Small Benefit Exemption for employees, allows you to move significant amounts tax-free over time.

But gifting requires planning and documentation. Make large gifts without understanding the rules and you create tax problems. Fail to document properly and you create issues during Revenue audits. Miss opportunities to use exemptions and you pay unnecessary tax.

The key is treating gifting as part of overall tax and succession planning, not isolated transactions. Whether you’re helping adult children buy homes, rewarding loyal employees, or transferring business ownership, strategic gifting saves substantial tax whilst achieving your goals.

Start by understanding the basics: €3,000 small gift exemption per person per year, CAT thresholds based on relationships, and Small Benefit Exemption for employees. Then plan how to use these rules over multiple years.

For Irish business owners, gifting often intersects with business succession and employee incentives. These situations need expert advice to optimise tax outcomes.

We help business owners structure tax-efficient gifting strategies that work within Revenue rules whilst achieving family and business goals.

Want to discuss your specific situation? Contact us for a confidential consultation on gifting and tax planning strategies.

Don’t leave money on the table through poor tax planning. Strategic gifting is one of the most powerful tools available to Irish business owners. Use it properly.

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