Discretionary Trust Tax (DTT)

Discretionary Trust Tax (DTT)

A discretionary trust is one where there is no immediate benefit to the beneficiary.

A Form DT1 must be completed and submitted to Revenue within four months:

• where a discretionary trust is set up by a living settlor
• when property becomes subject to a discretionary trust. This can be when the trust is first set up or during the life of the trust.

DTT is paid by the trustee, or in some cases a solicitor or accountant. The trustee manages and distributes the assets in the trust subject to the powers conferred by the deed or will.

The following DTT charges apply to the trust assets:

• an initial once-off 6% charge
• an annual 1% charge

Initial once-off 6% charge

There is an initial charge of 6% of the market value of the trust on the valuation date. This is whichever is the latest date of the following:

• the date the property becomes subject to the trust
• the date of death of the disponer
• the date when the youngest of the principal objects of the trust reach 21 years. Principal objects include the disponer's:
  • spouse
  • children
  • predeceased child's children.

The initial charge is payable within four months of the relevant valuation date. You must complete a Form IT4 and send it to Revenue with the tax due. There is a surcharge for late filing and Interest will be charged on late payments.

Annual 1% charge

A charge of 1% of the market value of the trust on 31 December (the valuation date) arises each year that the trust is in place. The annual charge is payable by 30 April of the year following valuation date.

You must complete a Form IT32 and send it to Revenue with the tax due each year. TThere is a surcharge for late filing and Interest will be charged on late payments.

Note

The first annual 1% charge will not arise until the year following the initial charge.

For example, if the initial charge arose in 2020, the first annual charge will arise 31 December 2021. The payment of first annual charge would be due 30 April 2022.

How to pay DTT charges

You can pay DTT by Electronic Funds Transfer (EFT). Make your payments to:

Capital Taxes No.3 Public Bank Account
Allied Irish Banks
7-12 Dame Street
Dublin 2. 

IBAN: IE32 AIBK 932086 16946049
BIC:  AIBKIE2D

As soon as you make the payment, email moneytrans@revenue.ie with the following details:

• The name and address of the person making the payment
• Settlor's or disponer's name.
• File reference and name of trust.
• The period covered by the payment.
• The amount of the payment.

You can also pay DTT by cheque or bank draft. Attach the cheque or bank draft to your DTT form and send:

Revenue Commissioners
Capital Acquisitions Tax Unit
Block F
Athy Business Campus
Castlecomer Road
Athy
Co. Kildare
R14 FE81.

Surcharge for late filing

A surcharge applies where DTT returns are not filed within four months of the relevant valuation date. The surcharge which will be added to the tax due is as follows:

• 5% of the tax due to a maximum of €12,695 where the return is submitted within two months of the due date
• 10% of the tax due to a maximum of €63,485 where the return is submitted more than two months late.

Exemptions from DTT

There are several exemptions from the DTT. These include trusts set up exclusively for:

• people with certain disabilities
• public or charitable purposes
• approved superannuation schemes.

You can apply for an exemption in writing though MyEnquires.