This article discusses Irish non-resident tax rules and how the system differs from other countries. We look at the difference between being resident and non-ordinarily resident plus Ireland’s domiciliation rules and how these can affect your tax status.
Irish tax rates for non-residents don’t differ from those of residents. Instead, the difference is in how Ireland views tax residence and its unique interpretation of both tax resident and domiciled statuses.
As always, whether it’s Irish tax or tax anywhere in the world, we recommend you seek advice from professional tax experts. Or, if you need a broader, more international view, let us create a specially-tailored Action Plan incorporating everything from taxation to obtaining residency visas to find the best solution for your needs.
Irish Non-resident Tax Rules
Individuals resident and domiciled in Ireland are subject to taxation on all their income and profits globally.
To better understand one’s tax status, therefore, it’s important to first understand what it means to be tax resident in Ireland, what it means to be ordinarily resident, and also understand the difference between resident and domiciled.
Irish Tax Residence
If an individual lives in Ireland for 183 days or more in one calendar year, or stays in Ireland for a total of 280 days or more over two years, they are considered a tax resident of Ireland for tax purposes.
The Irish tax year runs from January 1st until the 31st of December, inclusive.
Ordinarily Resident In Ireland
An individual is considered to be ordinarily resident in Ireland for tax purposes if they have lived in Ireland for the past three consecutive tax years.
An ordinarily resident individual will continue to be considered ordinarily resident unless they have lived outside of Ireland for the last three consecutive tax years. (In which case, they will be deemed non-ordinarily resident.)
What Does Being “Domiciled In Ireland” Mean?
Domicile is a legal term that generally refers to an individual’s permanent home. If you are domiciled in Ireland means that Ireland can be therefore considered your permanent home rather than a place where you claim residence.
Ireland’s special non-domiciled tax system rules can be confusing. While the system is often referred to as a “tax exemption,” it is not accurate. It pertains to an individual’s domicile and allows them to protect their wealth outside of Ireland from being taxed as long as it is not brought into Ireland.
By default, a person who was born and raised in the country is deemed to be domiciled in Ireland.
Similarly, a foreigner who is resident in Ireland may be considered to be an Irish-domiciled individual if it can be proven that they have made, or intend to make, they intend to make, Ireland their permanent residence.
If the opposite is the case, they can claim non-dom status, provided certain conditions are met, namely, that they can prove that they maintain a place of domicile in a country other than Ireland – e.g., they maintain a property in their home country and/or can readily demonstrate they wish to return there permanently.
Irish Income Tax For Non-residents
If you are an Irish resident but not domiciled in Ireland, you are eligible to pay income tax on all Irish-sourced income. Your worldwide income will only be taxed on a remittance basis. So you will only be taxed on foreign-sourced income that you bring into Ireland.
If you are both non-ordinarily resident and non-domiciled, you are only liable to pay Irish income tax only on income from Irish sources. This includes income from an Irish job or work done in Ireland. However, they will also be required to pay tax on any foreign income brought into Ireland.
Residence And Foreign Income
As a non-dom Irish resident, your worldwide income, including any foreign investment income, need not be liable for Irish tax.
Since this income is only taxed on a remittance basis, you do not pay income tax on that income, provided you do not bring it into the country. You will, however, still need to pay income tax on Irish source income.
Irish Capital Gains Tax For Non-residents
An individual who leaves Ireland after living there for a certain amount of time may still be considered an ordinary resident of Ireland for up to three consecutive years after their departure.
Individuals considered Irish-domiciled will still have to pay Irish capital gains tax on all their gains worldwide for the period of ordinary residence, assuming no double taxation relief is applicable.
Meanwhile, individuals who are not domiciled in Ireland but are considered ordinarily resident will still have to pay tax on any capital gain made in Ireland and foreign gains that are brought into Ireland.
Irish Inheritance Tax Non-resident
Capital Acquisitions Tax (CAT) is a tax on gifts and inheritance whereby the recipient is taxed (unless the disponer is a spouse or civil partner). The current rate is 33%, and there are three thresholds under which value are tax-free.
- Children: €335,000
- Direct family members (e.g., siblings, nieces/nephews/grandchildren): €32,500
- All other recipients: €16,250
For the recipient to pay CAT tax the following criteria must be met:
- The recipient must be resident / ordinarily resident in the Republic of Ireland
- The disponer must be resident / ordinarily resident in the Republic of Ireland
- The property is located in the Republic of Ireland.
Under certain circumstances, CAT tax may not be levied if:
- One or both parties are domiciled abroad
- An Irish resident beneficiary receives property in the United States from a person domiciled in the United States (this applies to inheritance tax only).
Tax Non-residence Status
An individual considered tax resident in Ireland, but who plans to become non-resident in the following tax year, may be able to claim “split-year relief” for the year of departure.
Any employment income earned after leaving Ireland would not be subject to Irish tax, and the individual may be eligible for a refund of unused tax credits and standard rate bands.
If you are neither tax resident nor domiciled in Ireland, you will still have to file a tax return and pay tax on any Irish-source income and may also be taxed on foreign employment income from work undertaken while located in the Republic of Ireland.