Double Taxation

How to avoid being taxed twice

Irish residents are taxed on their world-wide income, subject to certain treaty exceptions (non-residents are taxed only on income arising in Ireland).

Citizens of most countries are exempt from paying taxes in their home country when they spend a minimum period abroad, e.g. one year. Ireland has double taxation treaties with many countries, designed to ensure that income that has been taxed in one treaty country isn’t taxed again in Ireland. The treaty establishes a tax credit or exemption on certain kinds of income, either in the country of residence or the country where the income is earned.

Ireland has double taxation agreements with the following countries: Australia, Austria, Belgium, Canada, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Israel, Italy, Japan, the Republic of Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Russia, South Africa, Spain, Sweden, Switzerland, the UK, the USA and Zambia.

Some of these agreements have recently been or are in the process of being re-negotiated (e.g. with Italy), so you should check the current position before making any tax-related decisions. Ireland is also negotiating double taxation agreements with China, Egypt, Greece, India, Malaysia, Romania and the Slovak Republic. Where applicable, a double taxation treaty prevails over domestic law. For more information on double taxation agreements, Tel. 067-3353.

Even when there’s no double taxation agreement between Ireland and your country of residence, you can still obtain relief from double taxation. In these cases overseas tax may be deducted as an expense, but there are certain qualifying criteria. Note that if your tax liability in another country is lower than that in Ireland, you must pay the Irish Revenue Commissioners the difference. If you’re in doubt about your tax liability in your home country, contact your nearest embassy or consulate in Ireland. The USA is the only country that taxes its non-resident citizens on income earned abroad (US citizens can obtain a copy of a brochure, Tax Guide for Americans Abroad, from American consulates).

Leaving Ireland

When leaving Ireland, foreigners must pay any tax due for the previous year and the year of departure. A tax return can be filed before or after departure and must include your income and deductions from the start of the tax year in the year of departure up to the date of departure. When departure is made before the start of the tax year, the previous year’s taxes are applied. If this results in overpayment, a claim must be made for a refund. A tax clearance certificate isn’t required before leaving Ireland.