Expat taxes in Ireland

Posted: June 16th, 2014 Cork IrelandThe city of Cork

In Ireland, the taxation of individuals is based on a mixture of the concepts of residence and domicile. As in many countries, residence is consequent on presence in Ireland for more than half of a tax year, or a substantial cumulative total of days from previous years. An individual's domicile is in the country where he maintains his permanent home, in the country where he regards himself as belonging. Domicile in Ireland is acquired from an Irish-domiciled father, but can be changed to another country by establishing a life there. Resident foreign employees will thus not normally be domiciled in Ireland.

An individual resident and domiciled in Ireland pays tax on his world-wide income; an individual resident but not domiciled pays tax on his foreign income only if it is remitted to Ireland. A non-resident individual pays income tax only on Irish-sourced income, and is liable to capital gains tax only on gains arising in Ireland or remitted to Ireland, unless he is domiciled in Ireland in which case he is liable on all capital gains. Non-residents are generally not entitled to allowances, deductions, reliefs or reductions.

In his budget speech in December 2009, Finance Minister Brian Lenihan announced that the government would introduce an ‘Irish domicile levy’ of EUR200,000 on Irish nationals and domiciled individuals whose worldwide income exceeds EUR1m and whose Irish-located capital is greater than EUR5m, regardless of where they are tax resident.

From 1st January 2001, non-resident individuals paid the new 'exit tax' of 23% (increased to 26% in the Finance Act 2009) imposed on gains on encashment or maturity of Irish-resident investment fund holdings (previously they would have been liable on an annual basis for tax of 20% on gains). As a result of the 2012 budget, announced on December 6, 2011, this exit tax will be charged at the same rate as deposit interest retention tax plus 3%, or 33%.

It was also announced In the 2012 budget that the Irish citizenship condition for the payment of the domicile levy will be abolished for tax years from 2012 onwards. This means it will not be possible for an individual to avoid the levy by renouncing Irish citizenship, if he or she meets the other criteria for paying the levy.


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