Moving to or leaving Ireland

Did you know that even when you leave Ireland to live and work in another country you may still be liable to pay tax in and to make a tax return in Ireland? 

Your obligation to pay tax in Ireland is based on three factors, your Domicile, your Residence (Tax) and your Ordinary Residence status. These effects your obligations in Ireland to Income Tax, Capital Gains Tax and Capital Acquisition Tax.

Domicile is a legal concept and concerns the country where you live and intend to remain permanently or for an unlimited period of time. It can be different from your place of birth. Every person has a Domicile of Origin being the country of Domicile of your father. If your father was deceased before you were born or you lived permanently with your mother then your Domicile will be that of your mother.

You may take-up a Domicile of Choice after you reach the age of eighteen. In order to do so you must move to a new country with the intention of making it your permanent home or home for an unlimited period of time. There are various tests established in law to identify such a situation. Factors such as owning a house in that country, having a bank account, having taken out citizenship, even having purchased a graveyard plot are all persuasive factors when considering domicile of choice.

Residence refers to the tax jurisdiction (country) in which you reside. The number of days you spend in Ireland dictates where you are resident.

You will be resident in Ireland if:

  • You spend 183 days or more here in a tax year (Jan. to Dec.) or
  • You spend 280 days in Ireland over two tax years (ignoring a period of 30 days or less spent in Ireland in any year). This is referred to as the Look-Back Rule. For example in considering whether you are resident for 2016 one can look back at the days spent in the country in 2015. It doesn’t allow one to consider residency for 2015 by looking forward at the days spent in 2016.

Ordinary Residence reflects one’s pattern of residence over a number of years. You will be ordinarily resident (from year 4) once you have been resident in Ireland for three complete tax years. This status, once achieved continues for three further years after you have ceased to be Irish resident, based on the aforementioned days spent in Ireland rules.

For example, if you have a status of Irish Domiciled, Resident & Ordinarily Resident then whatever income you earn, irrespective of where it is earned, is subject to tax in Ireland. Subject to means that the provisions of the taxes acts apply to you; the payment of taxes, filing of returns, penalties and all other administrative requirements.

Someone Resident but Non-Domiciled in Ireland is only liable to tax on income earned in Ireland and to income earned outside Ireland to the extent that it is remitted (brought into Ireland) to Ireland.

In brief there are opportunities for a person who comes to live in Ireland to claim tax residency subject to specific conditions.

  • Your entitlement to tax credits and the standard rate cut-off depend on your residence.
  • A relief is available to married couples and civil partners, one of whom is not resident, provided the non-resident spouse or partner has no income. The relief allows the spouse earning in Ireland to claim the married persons allowance.
  • A degree of relief is also available in a situation where the foreign resident spouse or civil partner has foreign earnings.

Ireland has signed 72 Double Tax Agreements which deal with the process to be adopted in a situation where more than one tax jurisdiction (country) seeks to tax the same income source.

This area of taxation musts to be considered case-by-case. The Tax Man can provide you with the guidance you need.

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