Irish Tax Residency Rules >> General

General

If you are Irish born and bred and living and working in Ireland you pay tax in Ireland on your worldwide income and gains. If you do not fall into this category then the rules for deciding Irish tax residency may work to your advantage.

This is very complex and technical area and no decisions should be made on your Irish tax position without seeking specialist advice to consider your own particular circumstances.
The majority of people here in Ireland are ordinarily resident and domiciled here for tax purposes. The meaning of these two terms is vital to an understanding of how the tax rules operate in this area. In addition a third word resident is also used in deciding an individual’s liability to Irish tax. We now briefly explain each of these words as follows:

Resident

The test as to whether or not you are resident in this country for tax purposes is based on the number of days you spend in the country. If you spend 183 or more days in the Republic of Ireland in any year you are tax resident here. Alternatively if you spend 280 days in aggregate in that tax year and the preceding tax year you are also deemed resident here for tax purposes. Up to 31/12/2008 the days are counted by reference to where you are at the end of each day. If you are here at midnight you are deemed to have been here for the whole of the day. From 1st January 2009 the midnight rule has been abolished. You are considered to be here for a full day where you are in the country for any part of the day. 

Ordinarily Resident

You can remain ordinarily resident here for tax purposes although not actually resident in the country. Individuals are deemed to be ordinarily resident here from the commencement of the fourth tax year after they have been resident here for each of the three preceding tax years. On leaving the State you do not cease to be ordinarily resident here until you have been nonresident for three continuous tax years.

This is a very important concept for individuals hoping to avoid liability to Irish tax on disposals of assets by leaving the country. Although not resident here for a period of three years they are treated as being ordinarily resident here so that during that three year period they will still be liable for Irish Capital Gains Tax on the disposal of any assets.

Domicile

The concept of domicile is a matter of International Law and in effect means your chosen homeland. If you were born and raised in Ireland then you will have an Irish domicile. If you emigrate on a permanent basis abroad then you may adopt a new country of domicile. On the other hand if you go abroad to work on a temporary basis albeit for a number of years you will continue to retain your Irish domicile.

Using the Rules to your advantage

The rules outlined above can be used to ones advantage by Irish people returning to work here having been abroad for at least three continuous tax years or Foreign Nationals coming to work in Ireland either on a short or long term temporary basis. 

To be liable to Irish tax on your worldwide income you have to be both ordinarily resident and domiciled in this country. If you have worked abroad for a number of years (minimum three) then on your return you will not become ordinarily resident in this country until you have been here for three continuous tax years. If during this threeyear period you continue to earn income abroad (including the U.K. from 1st January 2008) you may be able to avoid liability to Irish tax thereon by not bringing such income into the country.

For Foreign Nationals coming to work here on a temporary basis without adopting Ireland as their country of domicile then they can avoid liability to Irish tax on foreign income provided it is not brought into this country. This will not be available in relation to income from an employment where that income relates to carrying out the work in Ireland. Special rules apply for the operation of PAYE/ PRSI in such circumstances. 

From 2009 onwards there is partial relief for nondomiciled individuals working here provided the employment contract is for at least 3 years. 

Summary

As already mentioned this is a very complex and technical area and the rules and regulations need to be very carefully examined and considered when deciding your position. For the majority of people it is very clear cut in that they will be both ordinarily resident and domiciled here and liable to Irish tax on their worldwide income and gains. 

For Irish Immigrants considering a return to this country their tax position should be examined to see if their affairs can be arranged in a way to take advantage of the rules dealing with this area. The same applies to Foreign Nationals coming to work here on a temporary basis.
We provide more detailed advice on this area by way of consultation and an additional charge will arise for same.