May 2012 | Residency rules in Ireland - Government launches public consultation for reform

The Minister for Finance has invited interested parties to make submissions on possible revisions to the current residence rules for the taxation of individuals.

Individuals who are tax resident in Ireland are taxable here on their worldwide income, gains, gifts and inheritances; whilst individuals who are not resident here for tax purposes are taxable on Irish source income and gains, on income from employments where the duties are carried out in the State and on gifts and inheritances of Irish situated property.  

In Ireland, an individual’s residence status for tax purposes for a tax year is determined by reference only to a “day counting” test of the number of days that an individual is present in the State for that tax year (183 days in a tax year or 280 days between the year in question and the preceding year).  

In addition to the residence rules, the Domicile Levy was introduced in recent years. As introduced, the levy applied to Irish citizens who were Irish domiciled, with Irish located assets worth in excess of €5 m, Irish income in excess of €1m in a tax year, and an Irish income tax liability below €200,000. The levy is €200,000, but any Irish income tax paid in respect of the tax year can be credited against the levy liability. From 1 January 2012, the levy no longer applies solely to Irish citizens. 

The Commission on Taxation in its 2009 Report recommended that the 183/280 days test for determining the tax residence of an individual should be supplemented by additional criteria, which should include a permanent home test and a test based on an individual’s centre of vital interests.

   The Minister has invited views generally and on the following particular matters: 

  • Whether or not, and how, the current day counting rules should be amended;
  • Whether or not, and how, the day counting rules should be supplemented with other rules;
  • The appropriateness of citizenship as a basis for taxation;
  • Whether or not, and how, the conditions for and/or the range of application of the Domicile Levy should be changed;
  • Whether or not the Domicile Levy should continue in place if the rules for determining residence were modified.
Any proposals should have due regard to  
  • The need to ensure that Exchequer tax yields are not undermined;
  • The continued promotion of Ireland as a location for inward investment;
  • Their ease of administration;
  • Their implications for arrangements in place under double taxation agreements with other jurisdictions.

It is understood that the Irish Taxation Institute will be making submissions on this. STEP Ireland is reviewing the position also andthis firm is involved in that aspect.

For further details see here.     


Aileen Keogan | Solicitor & Tax Consultant | 21 The Avenue | Louisa Valley | Leixlip | Co. Kildare | Ireland

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