Ireland non-domiciled tax – 16 things you need to know

Domiciled in Ireland

There is no statutory definition of domiciled in Ireland. Domicile is a legal concept broadly defined as an individual's natural home. Typically this is the place that the person was born and raised in. Your Domicile can only change if you clearly state and demonstrate that you are going to live in Ireland permanently.

How do I know if I am domiciled in Ireland?

If you are born, educated, and currently have a number of family links with Ireland - then you are probably domiciled in Ireland. Your domicile can also reflect your intentions, so if you intend to live in Ireland for the rest of your life, then you could argue that you are domiciled in Ireland. 

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Are you ordinarily resident in Ireland?

An individual is regarded as ordinarily resident in Ireland for a tax year if they have been an Irish resident for each of the three preceding tax years. Once they become ordinarily resident in Ireland, they do not cease to be ordinarily resident for a tax year unless they have been a non-resident of Ireland for each of the preceding three tax years.

The remittance basis of taxation Ireland

By using the remittance basis, it is possible to structure a non-domiciled person’s tax affairs so that their Irish tax exposure can be managed to acceptable levels. The remittance basis of taxation in Ireland is currently similar to that in the UK. Crucially, there is no remittance charge and the remittance rules are less burdensome.

Bringing money into Ireland and tax

This is the same as the above section on the remittance basis of tax in Ireland. Normally, you should only be taxed on the money you bring into Ireland to live on a day to day basis - for rent, food, travel, etc.

 

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Irish Residency Rules (Tax)

To be regarded as tax resident in Ireland you need to spend 183 days or more there in that tax year (1 January to 31 December). Irish residence can be gained if 280 days or more are spent in Ireland, taking account of the days spent there during a tax year and the preceding tax year under the ‘look-back’ rule.

Foreign income tax in Ireland

Remittances of capital are not subject to Irish income tax - income earned at a time when the individual was not resident in Ireland would be treated as capital in nature and therefore not subject to income tax here when brought (remitted) to Ireland. This means that while such individuals will be chargeable to tax in Ireland on Irish source income and gains, they will only be chargeable on foreign income and gains to the extent that they are remitted to Ireland.

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Getting a tax residency certificate in Ireland

If you arrive in Ireland in a particular year but are not present for the required number of days, you may elect to be resident for that year provided that you will be resident in the following year.

 

What about tax on the disposal of assets?

Capital Gains Tax (CGT) is a tax charged on the capital gain (profit) made on the disposal of any asset. It is payable by the person making the disposal. Only assets that are resident in Ireland are subject to CGT. Assets located outside Ireland are normally not subject to CGT.

So what income is taxable in Ireland

Income from Irish sources is taxable in Ireland. Income from the UK or other foreign sources is only taxable to the extent of amounts remitted here. So, if the income remains outside Ireland, it is not taxable in Ireland

How long can you domicile in Ireland before this changes?

Unlike in the UK, there are no ‘deemed domicile’ rules in Ireland. Therefore, a person can continue to use the remittance basis even if they are resident in Ireland for several years – subject to them not acquiring an Irish domicile of choice of course.

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Restricted Stock Options (RSU) and Non-Doms

If you are a tax resident in Ireland but are Non-Domiciled (typically this is where you are born in another country) then it is possible to structure this in a way where you only pay tax on disposed of RSUs that you remit to Ireland. 

Let's look at Monika's situation:

Domicile - born in Poland, moved to Ireland 6 years ago. Parents and family still live in Poland. She is clearly domiciled in Poland. 

Tax resident - she has lived in Ireland since 2015 and has been tax resident here since then. 

Employment - she is working as an engineer for an America SaaS Co for the last 6 years. 

RSUs - she was granted 10,000 RSUs @ €5 per unit in 2015. In 2017 the RSUs were vested and she paid tax on this vest at the marginal rate. 

6 years later, the share price is worth €50 per unit and she has disposed of the RSUs. The funds currently sit in a brokerage account in the US. Currently, she has €500,000 of funds from disposed of RSUs sitting in her brokerage account in the US. As she is a Non-Dom, this does not trigger a tax event. 

Each situation is unique but Monika has an opportunity to avail of her Non-Dom position in Ireland and only pay tax only the money that she brings back into Ireland. 

For more information, take a look at our RSU and Tax section. 

Should a Non-Dom invest in ETFs and/or ETCs?

Revenue have issued guidance stating that ETFs and ETCs that are domiciled in the US, EU or other OECD countries will follow the treatment applied to standard shares. Dividends would be liable to income tax, gains liable to CGT and the remittance basis of tax would apply. Therefore, these types of funds would have no adverse tax consequences for a non-domiciled individual. Revenue defines an ETF as an investment fund that is traded on a regulated stock exchange.

Care should be taken as a significant number of funds are domiciled in Ireland. An investment in such a fund would be considered an Irish asset.

Is Ireland a good location for legitimate offshore tax savings?

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Is this similar to the UK Non-Dom regime

The Ireland non-domicile tax regime is similar to the UK non-domicile regime, but there are key differences. Here's a comparison:

Similarities:

1. Remittance Basis:

   • Both regimes allow non-domiciled individuals to be taxed on a remittance basis. This means foreign income and gains are only taxed when they are brought into the respective country.

2. Domicile Status:

   • In both countries, domicile status is determined by the individual's long-term home and intent, rather than just residence.

3. Income and Gains:

   • Non-domiciled individuals in Ireland and the UK are subject to tax on their local income and gains but can opt to be taxed on foreign income and gains only when remitted to the country.

Differences:

1. Remittance Charge:

   • UK: There is a remittance basis charge (RBC) for long-term residents. Non-domiciled individuals who have been resident in the UK for 7 of the previous 9 years must pay an annual charge (£30,000) to use the remittance basis. This charge increases with the length of residency.
   • Ireland: There is no equivalent remittance basis charge for non-domiciled individuals.

2. Length of Residency:

   • UK: Non-domiciled individuals can use the remittance basis indefinitely, provided they pay the applicable RBC.
   • Ireland: The Irish regime does not impose a time limit on the use of the remittance basis, and there is no charge for long-term residents.

3. Tax Planning Opportunities:

   • UK: The UK has specific anti-avoidance rules that may restrict the benefits of the non-domicile regime in certain circumstances, such as deemed domicile rules after 15 years of residency.
   • Ireland: Ireland's non-domicile regime is generally considered more straightforward, with fewer anti-avoidance provisions than the UK.

4. Scope and Application:

   • UK: The UK regime is more complex, with detailed rules on what constitutes a remittance and various exemptions.
   • Ireland: The Irish regime is simpler, with a clearer distinction between remitted and non-remitted income and gains.

Conclusion:

While Ireland and the UK offer favourable tax regimes for non-domiciled individuals, the Irish system is generally less complex and more accessible, particularly because it lacks the remittance basis charge and has fewer anti-avoidance measures. However, the choice between the two will depend on individual circumstances and specific tax planning needs.

Suggested read:

Moving to Ireland from the UK 

Navigating UK Non-Dom Rule Changes: Why Ireland is the best location?