Tax residence and domicile in Ireland: a guide

We’ve made a guide to Income tax in Ireland but who is liable for paying tax in Ireland?

What are residence and domicile in Ireland? and how do they relate to taxes? And how does your tax situation change when you’re moving to or from Ireland? If these questions have been burning in your mind, you’re in luck! Here’s Babylon’s guide to tax residence and domicile in Ireland! Read on for more information!

Tax Residence and Domicile in Ireland

Your duty to pay taxes in Ireland is affected by whether you are a resident, your permanent home is in Ireland, your income is sourced to some degree in Ireland, or some combination of the three. This means that, even if you are not an ordinary resident or your domicile is outside of Ireland, you may still be liable for tax in Ireland.  

Residence for tax purposes

Residence for tax purposes depends on how many days you spend in the country. Even if you are not residing in Ireland during a particular year, Ireland may still be considered your ‘ordinary residence’ if:

• You spend  183 days or more in Ireland in one tax year (January – December of any given year)
• You spend 280 days or more in Ireland over a period of two consecutive tax years, spending at least 30 days in Ireland each year. 

If you have arrived in Ireland during the tax year but you have not been a resident for the required number of days, you can still choose to be a resident for that year if you are also going to be a resident during the following year.  If this is the case, you will be taxed on all of your world-wide income and you are also entitled to claim full tax credits. To make these arrangements, contact your nearest tax office for more information. 

Ordinary Residence

Your pattern of residence over the course of three years is taken into account when assessing your tax duties. If you have been a resident of Ireland for the past three consecutive tax years, then you are deemed ‘ordinarily a resident’ from the start of the fourth year. 

If you leave the country, you will be ordinarily a resident until you have been a non-resident for three consecutive tax years. For these three years you will be liable to pay tax on all of your worldwide income except for:

• Income from a trade or profession in which no part is carried out in Ireland
• Income from an office or employment in which no part is carried out in Ireland
• Other foreign income [investment, rental, etc.]

 For more information on ordinary residence, check out revenue.ie. 

Domicile in Ireland and the domicile levy

Domicile means living in a country with the intention of living there permanently. This is a much more permanent status than residence. Your domicile of origin would be your birth country and you retain this domicile unless you choose to gain a new one. To gain domicile in Ireland you must show evidence that you intend to live in Ireland permanently and you do not intend on returning to your domicile of origin. 

Remittance basis of assessment

If you are a Irish tax resident but non-ordinary resident and not domiciled in Ireland, you will pay tax on:

• Irish-sourced income
• Foreign income to the extent that it is remitted into Ireland via wire transfer, mail, or online transfers. 

Domicile levy

You may have to pay a domicile levy if you are domiciled in Ireland and your worldwide income exceeds €1m, your Irish property value is greater than €5m, or your Irish income tax in a year was less than €200,000. 

The amount of the levy is €200,000/year. It is paid each year through self-assessment. For more information on the domicile levy, click here.

Taxation while moving to or from Ireland

If you carry out the duties of your employment in Ireland but are paid by a foreign sourced company your income will be taxed under the PAYE system. Your employer is then responsible for registering you in Ireland and deducting Income tax, PRSI, and USC from your wages. 

Double taxation agreement

If you work and pay tax abroad, you may be entitled to certain tax reliefs under the Double-Taxation Agreement (DTA). If this is the case, you will be entitled to a tax credit for non-refundable tax paid in the other country. For more information on countries that hold DTA’s with Ireland, click here.

Non-Resident

If you are a non-resident but have income that you will pay both Irish and foreign tax on, you may be entitled to claim relief in your country of residence. This is only possible if said country has a Double Tax Agreement with Ireland. Revenue Ireland can only refund Irish tax you pay, therefore you must claim your refund of foreign tax from that country’s tax office. Furthermore, you cannot claim a credit for foreign tax against your Irish income if the foreign tax has been refunded already. 

Resident

If you are a resident or domiciled in Ireland you will be taxed on your aggregate world-wide income, including foeign income earned abroad. If you have already been taxed on this income, you may be able to claim a tax credit if the country in which you paid taxes on this income has a DTA with Ireland. 

Non-resident directors of Irish incorporated companies

If you are the director of an Irish incorporated company, you therefore hold an Irish Public Office. This means that you will pay tax on income earned from directorship regardless of residence or where said duties are carried. In some cases, you may be entitled to claim relief on said income but this is dependent on the DTA between Ireland and your country of residence. 

Split-year treatment

If you are moving to Ireland or returning after spending many years abroad, you can claim split-year treatment in your year of arrival. This means that you are treated as a resident in Ireland from the date you arrive and all of your employment income earned from that date in Ireland will be taxed in the normal way. Likewise, if you are leaving Ireland permanently to take up employment abroad, you may also claim split-year treatment in your year of departure. This only applies to employment income and generally full tax credits are allowable on a cumulative basis. In order to avail of split-year treatment, you must contact your Revenue office. 

Non-resident and domiciled in Ireland

If you are a non-resident  but domiciled in Ireland for a tax year, you are liable for taxes on your world-wide income except for:

• Your foreign income form a trade, profession, or employment performed outside of Ireland
• Any Capital Gains you earn in Ireland

Non-residents and non-domiciled in Ireland

If you are a non-resident and non-ordinarily a resident in Ireland during the tax year, you will pay Irish tax on:

• Your Irish income from a trade, profession, or employment carried out in Ireland
• Any gains on Irish-specified assets only (land, buildings, minerals, and assets of trade carried out in Ireland])

Tax reliefs for those returning to Ireland for work

If you have moved or returned to Ireland to work, there are some tax allowances and reliefs you may be entitled to. These include:

European Union citizens or nationals

If at least 75% of your aggregate worldwide income is taxable in Ireland you receive full tax credits on a cumulative basis. If less than 75% of your aggregate worldwide income is taxable in Ireland, you may receive a portion of tax credits. 

Migrant Members Relief: 

You may claim relief on contributions you continue to pay to a qualifying overseas pension when you move to Ireland. For more information, click here.

Non-resident spouse or partner

If you are married but your partner does not have residence or domicile in Ireland, you are treated as a single person for tax purposes. If, however, your spouse lives abroad and has no income in that country, you can be taxed as a married person. For more information on how marriage and civil partnerships affect taxation, click here

PAYE exclusion order

PAYE exclusion orders notifies your employer to not deduct Income Tax USC from your wages. The exclusion order starts from the date you leave Ireland and remains in place while you are a non-resident and working abroad. This order may be issued if you are employed by an Irish employer, all aspects of your employment is carried out abroad, and you will be a non-resident in Ireland in the tax year. Your employer is responsible for sending full details in writing to the Revenue Office. If you wish to continue paying Pay Related Social Insurance [PRSI] your employers must contact the Department of Employment Affairs and Social Protection [DEASP].

There’s a lot of information here but it is essential to know your residential and domiciliary status in Ireland to ensure you’re not under/overpaying taxes. Have experience changing your residence status or domicile to or from Ireland? Comment your experience and advice below!

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