Income Tax Liability

Who is liable to pay income tax?

In general, liability for Irish taxes depends on your residence status. You’re considered resident in Ireland for tax purposes if you spend 183 or more days there in a tax year or 280 days in two consecutive tax years.(But if you’re in Ireland for 30 days or less in either of those years, they won’t count towards the 280 days.)

You become ‘ordinarily resident’ when you have been resident for three consecutive tax years. If Ireland is considered to be your permanent home, you’re said to be ‘domiciled’ there (this is distinct from your legal nationality and your residence status).

You may choose to be treated as an Irish resident from the date of your arrival if you intend to remain in Ireland permanently and you think it will be to your tax advantage (you will need to satisfy the Inspector of Taxes that you’ll be resident the following year). Note that the 183-day rule also applies to other EU countries and many countries (e.g. Britain) limit visits by non-residents to 182 days in any one year or an average of 90 days per tax year over a four-year period.

If you’re returning to Ireland and you’re both resident and domiciled in the year of your return, you’ll be liable to Irish income tax on all your income. However, if you have spent fewer than 183 days in Ireland during the previous year and therefore aren’t resident, your employment income earned before your return will be exempt, although your non-employment income may be taxable.

Note that Irish residents are liable to tax on both Irish source income and foreign income (including foreign pension income) and that the latter is also liable for taxation in the foreign country. However, Ireland has double taxation agreements with 34 countries, therefore you will obtain relief if your country of residence is among them.

If you take up employment on your return to Ireland but haven’t worked there since the start of the current tax year (i.e. 6th April 2001 or 1st January 2002), you’ll need to complete Form 12A, which is available from a tax office or your employer. If you intend to reside in Ireland, you’ll probably receive the full income tax allowance, but if you start work part way through the tax year intending only to stay a few months, you may be restricted to a temporary or emergency tax allowance.

If you’re a tax resident in two countries simultaneously, your ‘tax home’ may be determined by the rules applied under international treaties. Under such treaties you’re considered to be resident in the country where you have a permanent home; if you have a permanent home in both countries, you’re deemed to be resident in the country where your personal and economic ties are closer. If your residence cannot be determined under this rule, you’re deemed to be resident in the country where you have a habitual abode. If you have a habitual abode in both or neither country, you’re deemed to be resident in the country of which you’re a citizen. Finally, if you’re a citizen of both or neither country, the authorities of the countries concerned will decide your tax residence between them!

If you intend to live permanently in Ireland, you should notify the tax authorities in your previous country of residence. You may be entitled to a tax refund if you depart during the tax year, which usually necessitates completing a tax return. The authorities may require evidence that you’re leaving the country, e.g. evidence of a job in Ireland or of having bought or rented a property there. If you move to Ireland to take up a job or start a business, you must register with the local tax authorities soon after your arrival.


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