With effect from 1 January 2024 a new reporting requirement has been introduced in respect of certain interest free loans. As a result a gift tax return, also known as a capital acquisitions tax (CAT) return, must be filed by the recipient of a “specified loan” from a close relative. This note explains the new reporting requirement and what action is required by you.

What is a specified loan?

A specified loan is any loan, advance or any form of credit that is:

• Made to a person by a close relative of the person
• Made by a company to a person where a beneficial owner (e.g. shareholder) of the company is a close relative of that person
• Made to a company, where a person is a beneficial owner of the company and the person making the loan is a close relative of that person
• Made by a company to another company where the person is a beneficial owner of the second company and a beneficial owner of the first company is a close relative of that person.

Who is a close relative?

In relation to a person, a close relative includes:

• A parent
• A grandparent or great grandparent
• A sibling
• An aunt or uncle
• A grandchild or great grandchild

What specified loans need to be reported?

If all the following conditions are satisfied, then the specified loan must be reported to Revenue:

• The loan is deemed to have given rise to a gift under CAT legislation. This means a loan on which no interest is charged or a below market rate of interest is charged during the calendar year,
• No interest is paid on the loan within 6 months of the end of the calendar year and
• The balance outstanding on the specified loan, when aggregated with the balance outstanding on any other specified loans, exceeds EUR335,000 on at least one day in the calendar year.

Who reports the specified loan?

The person responsible for reporting the specified loan is the recipient of the loan, who should report the loan on a CAT return.

What information must be reported?

The information to be reported is as follows:

• The name, address and tax reference number (i.e. PPS number) of the lender(s)
• The balance outstanding on the loan(s)
• Such other information as the Revenue Commissioners may reasonably require.

When must this be reported?

The annual “gift” arising from a specified loan is deemed to have been received on 31 December. As the new reporting requirement only came into effect from 1 January 2024, the general view is that the first returns reporting the loans will be due on 31 October 2025, in respect of the calendar year ending on 31 December 2024.

However, there is also a view that there is an earlier reporting requirement and that reportable specified loans that were in place on 31 December 2023 must be reported by 31 October 2024. Clarity on this point is being sought from Revenue.

Action required by you

Reporting the loan

If you have a specified loan that is reportable then you will need to file a CAT return in respect of this loan. In line with the general view, it is our view that the first filing date for such a loan will be 31 October 2025, subject to Revenue confirming 31 October 2024 as an earlier filing date.

The reporting of the loan will put the loan on record with Revenue. This would be helpful in the event of a future Revenue enquiry into the nature of funds provided between close relatives.

Not reporting the loan

There may be options available to you if you do not want to report a loan.

• The terms of the loan can be changed to charge a nominal amount of interest and this interest should be paid within 6 months of the year end. Given there is some doubt over whether the new reporting requirement applies to loans that were in place prior to 1 January 2024, if you chose this option then we recommend that the loan terms are changed and interest is paid by 30 June 2024 at the latest
• Change the terms of the loan so that a market rate of interest is charged on the loan. This would remove the reporting requirement for 31 October 2025 but would not do so if Revenue indicates that there is a reporting requirement for 31 October 2024.

If you want to consider either of these options further or require assistance with the filing of a CAT return please do not hesitate to contact us.