Covid-19 - Tax residence rules relaxed in Ireland

The Covid-19 pandemic has caused a great deal of uncertainty for non-domiciled tax residents in Ireland. International travel restrictions caused by the pandemic have left many don-domiciled tax residents in the difficult situation of not being able to return to the country where they are tax resident. In response to this situation, the Revenue Commissioners have introduced an easing of measures regarding tax residency to accommodate these unforeseen circumstances. Revenue has stated that where an individual’s departure from the State is prevented due to Covid-19, “force majeure” will be applied in order to establish an individual’s tax residence position.

Individual

For an individual to be considered an Irish tax resident, it is a requirement that they must be present in the State for 183 days or more in the year; or 280 days over two years with at least 31 days presence in the State each year.

For individuals who are unsure about not meeting their obligations Revenue has provided the following guidance;

“where an individual is prevented from leaving the State on his or her intended day of departure due to extraordinary natural occurrences…none of which could reasonably have been foreseen and avoided – the individual will not be regarded as being present in the State for tax residence purposes for the day after the intended day of departure provided the individual is unavoidably present in the State on that day due only to ‘force Majeure circumstances”.

Companies

When Revenue is defining the tax residency of a company they concentrate on where the company is centrally controlled and managed. However, the travel restrictions caused by Covid-19 has prevented senior executives from attending to the management of a company in the State, thus raising the question that the company is being managed from outside the State. Thankfully Revenue is prepared to show indifference to such presence in the State or outside the State for corporation tax purposes for a company.

Revenue has recommended that all individuals and companies concerned should maintain records of the circumstances of their presence in the State, or outside the State, resulting from Covid-19 restrictions.

If you are returning to Ireland and want to learn more about tax residency, click here.