Capital Acquisitions Tax (CAT)
Irish capital acquisitions tax (CAT) comprises principally gift tax and inheritance tax. As Medtronic previously described in its Form S-4 filed with the United States Securities and Exchange Commission on November 20, 2014, CAT could apply to a gift or inheritance of Medtronic plc ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because Medtronic plc ordinary shares may be regarded as property situated in Ireland as the share register of Medtronic plc must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT.
As of April of 2016, CAT is levied at a current rate of 33% above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (i) the relationship between the donor and the donee and (ii) the aggregation of the values of previous gifts and inheritances received by the donee from persons within the same group threshold. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €280,000 in respect of taxable gifts or inheritances received from their parents. More details in relation to group thresholds for CAT purposes are set out below. Medtronic plc shareholders should consult their own tax advisors as to whether CAT is creditable or deductible in computing any domestic tax liabilities.
There is also a “small gift exemption” from CAT whereby the first €3,000 of the taxable value of all taxable gifts taken by a donee from any one donor, in each calendar year, is exempt from CAT and is also excluded from any future aggregation. This exemption does not apply to an inheritance.
There are other reliefs and exemptions from CAT which may apply depending on the circumstances of the gift or inheritance. For example, a gift or inheritance of Medtronic plc ordinary shares which is taken for purposes which are, in accordance with Irish law principles, public or charitable, may be exempt from CAT provided certain conditions are met. In addition, interests in shares in certain circumstances might not be regarded as Irish situate property for CAT purposes, in which case a gift or inheritance of such interests may not be within the charge to CAT (depending on the place of residence, ordinary residence and domicile of the parties). Medtronic plc shareholders should consult their own tax advisors as to whether a charge to CAT may arise in respect of a gift or inheritance of their Medtronic plc ordinary shares and if so, whether any relief or exemption may be available.
Statements made in this disclosure are correct as of April 2016. These provisions may be updated or changed under Irish law. Further information in relation to CAT may be found at http://www.revenue.ie/en/tax/cat/index.html
Relationship to Donor
Parent⃰ / Brother / Sister / Niece / Nephew / Grandchild
Relationship other than Group A or B
Group Threshold on or after 14 October 2015
Exempt Without Limit
⃰ In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold.
This information is correct as at 29 April 2016