Today 12 June 2018 is the 30th anniversary of the day Ray Houghton scored THAT goal against England in Stuttgart to give Ireland a famous 1-0 victory in our first ever game at a major international tournament.
For many people of a certain disposition (and sadly, a certain age) this evokes both misty-eyed memories and a certain sense of sadness at seeing how far we have fallen as a footballing nation since that fateful day at the Neckarstadion.
However, as a tax adviser something else grabs the attention when looking at the team line-up. Of the 11 who started, 6 were born outside of Ireland and would not necessarily have always considered themselves “Irish”. This of course has parallels with the tax concept of domicile. Though “domicile” is not specifically defined in legislation there is a wealth of case-law on the topic which has refined the rules as to determining one’s domicile status for Irish tax purposes.
Though our Irish tax system is primarily based on “tax residence” there is favourable tax treatment for individuals who live in Ireland but are not domiciled here. This “domicile” approach is no longer very prevalent, particularly in Europe but it has remained an integral part of our tax system and is an important part of Ireland’s overall strategy to attract foreign businesses and individuals here.
In particular a tax resident but non-domiciled individual can avoid Irish taxation on foreign income or gains unless such income / gains are actually brought to Ireland or “remitted” here. However, great caution is needed in a number of areas such as:
• Bringing assets (e.g. art, a car, etc.) to Ireland – if bought with foreign income could be treated as a remittance.
• Using a credit card in Ireland and paying the bill out of foreign income – treated as a remittance.
• Gains from the disposal of “an offshore fund” – taxable on sale even if the proceeds are never brought to Ireland.
• Accumulated capital and income arising need to be kept separate – Revenue always assume income is remitted first out of a mixed fund.
What is less likely known is the beneficial the tax treatment of “non-domiciled” persons in relation to gift and inheritance tax (“CAT”). A non-domiciled person has to be actually tax resident in Ireland for the 5 consecutive years prior to receiving a gift or inheritance in order to be treated as tax resident here – otherwise all foreign gifts and inheritances (if received from a non-Irish person) will not be taxable in Ireland.
This clearly offers opportunities for tax planning for such non-domiciled individuals – this is particularly the case for persons who are intending to come to Ireland in order that their affairs, bank accounts etc. are correctly set up in advance….
For more information, please contact Donal Bradley at; firstname.lastname@example.org