Tax Professional usually responds in minutes
Our tax advisers are all verified
Unlimited follow-up questions
Starting January 1, 2024, there’s a significant change in the tax landscape concerning loans from close relatives in Ireland.
A new mandatory filing obligation (“CAT”), as per section 46(4A) CATCA 2003, amended by section 80 of Finance (No. 2) Act 2023, comes into effect.
This change isn’t limited to new loans post-2024 but also encompasses existing loans.
The obligation to file a CAT return falls on recipients of a “specified loan” from a “close relative”.
The definition of a “close relative” includes a parent, sibling, lineal ancestor or descendant, or a civil partner of a parent, among others.
This definition extends to loans made by or to private companies where shares are held directly or through a trust.
Any loan, advance, or form of credit from a close relative is considered a specified loan.
Interestingly, there’s no requirement for the loan to be documented in writing.
A CAT return is necessary if:
If you have multiple loans from different close relatives, you must aggregate them to see if the total exceeds €335,000.
However, if interest is paid on a loan, it doesn’t count towards this total.
Note that interest must be paid, not just accrued, and this must happen each year to avoid the reporting requirement.
The first CAT return under this new rule will be due by October 31, 2025.
This return should include the lender’s name, address, tax reference number, the outstanding loan balance, and any other information the Revenue Commissioners may require.
Given that this change could lead to increased scrutiny of family loan arrangements, it’s wise to review existing loans for compliance.
Ensure your documentation and loan terms are in order to meet these new reporting requirements.
This new mandate underscores the need for meticulous financial planning and record-keeping, especially in family financial matters.
Remember, this isn’t just a one-time assessment; it’s an annual obligation that requires continuous monitoring and reporting.
If you have any thoughts on this article on Loans from Close Relatives, or Irish tax matters in general, then please get in touch.
The Cayman Islands offers a unique form of statutory trust called a “STAR Trust,” which stands for Special Trusts Alternative Regime.
STAR Trusts, as governed by Part VIII of the Trusts Act (revised).
A STAR trust might provide increased flexibility when compared to traditional trusts. This might include in the following areas:
The key uses of STAR Trusts include:
Technical requirements for STAR Trusts include explicit written creation, clear intent to opt-in to the STAR Regime, and the same legal framework as traditional trusts except where variations are introduced by the STAR Regime.
Enforcers play a unique role in STAR Trusts, with their standing to enforce the trust being reserved as a right or duty.
Enforcers have the same rights and remedies as beneficiaries under ordinary trusts, providing them with significant control and oversight.
Trustees of STAR Trusts must include at least one trust corporation, as per Cayman Trusts Act requirements.
STAR Trusts ensure certainty and reform of purposes, allowing the trust terms to confer powers to resolve uncertainties.
The Cayman court has jurisdiction to reform the trust when execution becomes impossible, impractical, or obsolete.
While they cannot directly own land in the Cayman Islands, they are permitted to hold interests in entities that own land for business purposes.
Practical uses for STAR Trusts include creating special purpose vehicles, orphaning private trust companies, holding operating companies with limited trustee involvement, and supporting social benefit projects.
Recognition of these vehicles outside the Cayman Islands has generally been positive, with most countries recognizing them as valid trusts.
Due to the flexibility and versatile nature of STAR Trusts, they are expected to play a significant role in offshore transactions and arrangements for the foreseeable future.
If you have any queries about this article, trusts or the Cayman Islands, then please get in touch.
The cost of retirement is increasingly becoming a concern, with rising food and energy prices contributing to the growing expenses. In fact, the amount needed for a minimum living standard in retirement has surged by nearly £2,000 in the past year.
As you diligently contribute to your personal or workplace pension plan, it’s essential to have a clear understanding of the funds required to support your post-work life. Fortunately, the recently updated Retirement Living Standards, developed by the Pensions and Lifetime Savings Association (PLSA), offer valuable insights into the annual income necessary for a comfortable retirement.
By utilising these standards, combined with our comprehensive tools and resources, you can effectively plan for the future you desire.
For single pensioners, the minimum required to survive has increased by 18% to £12,800 per year in 2022. Retired couples face an even greater rise of 19%, now needing a minimum of £19,900 annually, representing a £3,200 increase, according to a study conducted at Loughborough University and funded by the PLSA.
Don’t let the cost of retirement catch you off guard. Take proactive steps today to assess your financial needs and plan for a secure future. Leverage the Retirement Living Standards and our resources to make informed decisions and confidently navigate your retirement journey.
As retirement approaches, envisioning your post-work plans becomes crucial. Will you embark on exciting vacations or consider home renovations? Perhaps a new car is on the horizon. To effectively plan for your future, it’s essential to ask yourself these important questions.
By understanding your anticipated expenses during retirement, you can determine the necessary savings required to fulfil your aspirations. Don’t overlook the significance of financial preparedness in ensuring a comfortable retirement.
Take the time to assess your financial goals and evaluate the potential costs associated with your desired lifestyle. This proactive approach will empower you to make informed decisions and establish a robust savings plan.
Prepare for a fulfilling retirement by acknowledging your financial needs and setting realistic goals. Begin saving now to secure the future you envision.
The Pensions and Lifetime Savings Association (PLSA) has introduced three retirement living standards, categorised as minimum, moderate, and comfortable. These standards, developed in collaboration with Loughborough University, offer valuable insights into the financial requirements across different levels of lifestyle.
Each standard incorporates the cost of various goods and services, forming “baskets” that track price changes over time, including home maintenance, food and drink, transportation, holidays and leisure, clothing, and support for others. These standards provide a comprehensive view of the annual income needed for both individuals and couples.
By familiarising yourself with retirement living standards, you can gain a clearer understanding of the potential costs associated with different lifestyles during retirement. Use this knowledge to plan effectively and work towards achieving your desired level of financial comfort.
Ensure your retirement aligns with your aspirations by utilising the PLSA’s retirement living standards as a valuable resource in your financial planning journey.
Achieving a retirement income of £50,000 per year is relatively uncommon among pensioners. According to Loughborough University researchers, approximately 72% of the total population are projected to meet at least the minimum standard of living in retirement. Around one-fifth of the population is on track for a moderate income level, while 8% can expect a comfortable retirement. However, it’s important to note that these figures were calculated before last year’s significant inflation surge.
Ensuring financial security during retirement is a priority for many individuals. While reaching the £50,000 bracket may be challenging, it’s crucial to plan diligently to meet at least the minimum standard of living. By staying proactive and making informed decisions, you can increase your chances of attaining the desired level of financial stability in your post-work years.
If the prospect of relying on a monthly income of £1,000 or less in retirement is unsettling, it’s time to take action and save more before you stop working. But how much should you save?
We consulted researchers from Loughborough University and the PLSA to determine the additional savings required for individuals and couples to reach the minimum, moderate, and comfortable retirement brackets if they retire at age 67, even with the full new state pension. The projected amounts ranged from £0 to £530,000.
Encouragingly, the table highlights a £0 figure: If both partners receive the full £10,600 state pension, their combined income surpasses the minimum requirement of £19,900 for a comfortable retirement.
However, the challenging reality is that a single person aiming for a comfortable retirement must save a significant £500,000 by the age of 67, all while managing mortgage or rent payments and coping with the ever-rising cost of living.
Take control of your retirement future by calculating your savings goals. By developing a comprehensive savings plan, you can work towards achieving the financial security necessary for a comfortable retirement.
Source: Loughborough University and the Pensions and Lifetime Savings Association. (London figures may vary)
Source: Loughborough University and the PLSA
Plan and save accordingly to achieve the desired living standard in retirement. Consider these benchmarks as you work towards securing a financially stable future.
For individuals who feel unprepared to fully retire or simply prefer to stay partially active in the workforce, semi-retirement can offer distinct advantages. In this scenario, you may require a lower income compared to complete retirement since you’ll continue to receive earnings from your employer. With semi-retirement, you have the option to supplement your income by accessing pension funds or utilising other savings before tapping into your retirement plan.
By strategically balancing work and leisure, you can enjoy financial stability while gradually transitioning into retirement. Evaluate your financial situation, including available savings and potential pension options, to determine the most suitable approach for semi-retirement. This flexible path allows you to continue saving for the future while enjoying the benefits of reduced working hours and increased leisure time.
Are you ready to plan for a comfortable retirement in the UK? Don’t leave your financial future to chance. Take control of your retirement savings with these steps:
Remember, the key to a comfortable retirement lies in proactive planning and taking action today. Start building your retirement nest egg and pave the way for a financially secure future with the help from Tax Natives.
When it comes to tax planning, consecutive gifting or “Kettenschenkung” can be an attractive way of optimizing the use of tax brackets and personal tax allowances.
This concept allows for the transfer of assets to family members over time, which can help to keep the gift tax burden low and preserve family assets.
Recently, the German Federal Fiscal Court clarified the conditions for consecutive gifting in its ruling (dated July 28, 2022 – II B 37/21).
The case that was brought before the court concerned the donation of a house by a father to his daughter, who then donated half of the house to her husband.
The tax authorities argued that the father’s donation must be taxed as if he had donated half of the house directly to his son-in-law. This would have resulted in a higher tax burden for the son-in-law, as the tax allowance for family members is higher than for third parties.
However, the court clarified that the determination of the respective donor and beneficiary in cases of consecutive gifting is based on whether the person passing on the asset has an independent decision-making power regarding the disposal of the gifted asset.
Therefore, a valid consecutive gift structure requires at least two successive gifts that are legally effective, and the intermediary donee must obtain the right to fully dispose of the gifted assets without any obligation to transfer them to another person.
Consecutive gifting can be an effective structure in cases where a direct gift would lead to an increased gift tax burden. However, it is important to carefully consider the requirements established by case law in order to achieve the intended tax benefits.
If the intermediary donee intends to pass on the gift to another person, close attention must be paid to the implementation of consecutive gift arrangements.
The contractual agreements must clearly emphasize the power of disposition of the first donee, and all provisions must be avoided that could result in an obligation of the first donee to transfer all or part of the gift to another person.
It is worth noting that the potential for tax optimization is not limited to private assets but can also be used for tax planning in the context of business succession.
The personal allowances under the German Inheritance and Gift Tax Act are higher among family members than among third parties, which can be effectively utilized to minimize the tax burden and preserve family assets.
Consecutive gifting can be a valuable tool for tax planning and asset preservation, but it is important to carefully consider the legal requirements and contractual agreements in order to achieve the intended tax benefits.
With the right approach, this concept can be a powerful strategy for families and businesses alike.
If you have any queries about consecutive gifting in Germany, or German tax more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.