An English speaking country neighbouring the UK, Ireland offers many advantages for individuals who wish to relocate from the UK and maintain access to the European Union.
In Ireland, an individual’s residency and domicile determine their liability to income tax. Individuals who are Irish resident and domiciled will be liable to tax on their worldwide income and gains. However, the remittance basis of taxation for non-Irish domiciled individuals may provide an opportunity to manage and structure tax affairs in a tax efficient manner. Non-domiciled individuals are liable to Irish tax on Irish sourced income and gains and foreign income/ gains to the extent that they are remitted to Ireland. Unlike the UK, there is no remittance basis charge (RBC) and remittances of funds comprising of income and gains realised prior to the year of taking up residence in Ireland are not liable to tax. It is important that these funds are properly structured and maintained.
For individuals moving to Ireland for employment purposes, split year relief may be available in the year of arrival, which provides that any foreign employment income earned outside Ireland up until the date of arrival would not be liable to tax even if remitted into Ireland.
Individuals who are assigned to Ireland by their employer may also, subject to conditions, be eligible for the Special Assignee Relief Programme (SARP). Eligible employees earning between €100,000 and €1 million a year may claim relief under SARP over a five year period.
Residence and domicile status also impacts on the charge to capital acquisitions tax (CAT) which is primarily payable by the recipient of gifts and inheritances. The present CAT rate is 33%. Individuals have lifetime tax – free group thresholds and certain reliefs are available. While there is no similar provision in Ireland for the exempt gift transfer that operates in the UK, in certain instances, non-Irish domiciled individuals are not liable to CAT. Under Irish legislation, the charge to CAT arises when the benefactor or recipient is Irish resident or ordinarily resident or the assets are situated in Ireland. However, for non-Irish domiciled individuals who are resident or ordinarily resident, they will not be deemed ‘resident’ for CAT purposes and will not be within the scope to CAT unless they have been tax resident for the preceding consecutive five years.
This summary is intended as a general guide. No action should be taken without obtaining professional taxation advice. If you require any advice on the above, please do not hesitate to contact Purcell McQuillan Tax Partners Ltd on 01 668 2700 Eimear McArdle or Jane O’Hanlon.