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Tax Residency: Non-Resident / Non Domicile / Remittance Tax Ireland

29 May 2017 By Michael O'Mahony


tax_filing_deadline.jpgNon-Resident Tax

Non-Irish Residents are obliged to pay Irish tax on Irish sourced Income such as employment & rental income. This may be offset against their foreign tax liability in their country of tax residence depending on the provisions of Ireland’s Double Tax Treaty with that country.

Non-Irish Residents do not have to pay Irish tax on non-Irish sourced Income.

How do I know if I am resident in Ireland for a tax year?

Your residence status for tax purposes is determined by the number of days that you are present in Ireland in a tax year. You will be resident in Ireland for a tax year in either of the following circumstances:

  • If you spend 183 days or more in Ireland during a tax year or,
  • If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

What income will I be chargeable to tax on in Ireland?

You will be taxed on your worldwide income, for a tax year, that you are resident, ordinarily resident and domiciled in Ireland for tax purposes.

What does the term “Ordinarily Resident” mean?

The term ordinarily resident as distinct from resident refers to an individual’s pattern of residence over a number of years. If you come to Ireland for the first time and remain resident for three consecutive tax years, you will become ordinarily resident from the beginning of the fourth tax year.

Can I make a Repayment Claim on leaving the country?

On leaving the country you should notify Revenue, as you may be entitled to claim a tax refund. You may do so by completing Form P50 and submitting it to your local Revenue office with Form P45 (parts 2 & 3) which you should receive from your employer.

(Source: www.revenue.ie)

Non Domicile Tax

Remittance Tax

What is Domicile?

Domicile is a concept of general law. It may be broadly interpreted as meaning residence in a particular country with the intention of residing permanently in that country. Every individual acquires a domicile of origin at birth. A domicile of origin will remain with an individual until such time as a new domicile of choice is acquired. However, before the domicile of origin can be shed, there has to be clear evidence that the individual has a positive intention of permanent residence in another country and has abandoned the idea of ever returning to live in his/her country of birth.

Changes in UK Remittance Taxation

Following changes announced in the UK pre-budget report on 09/10/2007, UK resident Individuals paying tax on the ‘remittance taxation basis’ face an additional tax charge

The ‘remittance basis’ applies to those UK residents who are not domiciled in the UK or who are not ordinarily resident in the UK. The remittance basis provides that such residents will be taxed on foreign income and gains only when they are remitted to the UK.

The changes mean that after a non-domiciled individual has been resident in the UK for seven years they will only be able to use the remittance basis of taxation if they pay an additional tax charge of £30,000 a year. Where an individual then decides not to use the remittance basis (and not pay the additional tax charge) they will be taxed on all their worldwide income and gains whether or not they are remitted to the UK.

The new rules came into effect from 06 April 2008 and all previous years of residence will count from that day. So, for example, an individual not domiciled within the UK who has been resident in the UK for five years in April 2008 will only be able to claim the remittance basis of taxation for two more years before they have to pay either the £30,000 annual tax charge or account for tax under the arising basis.

It is believed that more than half of the UK non-domiciled “super rich” currently residing in the UK will leave when the Government imposes this annual £30,000 charge on foreigners determined to keep their overseas income out of the UK tax net. About a third of ‘non-doms’ have well-advanced plans to sell properties and depart, which gives an indication of how the ‘non doms’ in the UK are reacting to the UK tax changes.

Irish Remittance Taxation

A similar basis of taxation applies in the Republic of Ireland. The remittance basis of assessment applies to foreign sourced income (including UK sourced income effective from 01 January 2008). It provides that for any tax year during which you are not Irish domiciled, or if you are an Irish citizen who is not ordinarily resident in Ireland, you will only be taxable to the extent you bring that income into Ireland.

UK residents effected by these changes should therefore consider taking up Republic of Ireland residency as it is now a very attractive alternative location for high net worth individuals.

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Tagged With: Frequently Asked Questions, Advice, Tax