Non-Domiciled Remittance Basis Ireland Taxation

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Ireland’s tax system offers significant advantages for individuals who are residents but not domiciled in the country through its remittance basis of taxation.

This system allows qualifying individuals to limit their tax liability on foreign income and gains, making Ireland an attractive location for international high-net-worth individuals.

The remittance basis is a cornerstone of Ireland’s approach to taxing non-domiciled residents, with clear rules determining eligibility and application.

Understanding how the non-domicile remittance basis system works is essential for those considering living in Ireland while maintaining international financial interests.

This serves true as proper planning can result in substantial tax efficiencies while ensuring compliance with Irish tax law.

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Does Ireland Have Non-Dom Status?

Yes, Ireland does recognize and provide special tax treatment for non-domiciled individuals, commonly referred to as “non-dom”.

The non-dom concept is an established part of Ireland’s tax system.

It allows individuals who are tax residents but not domiciled in Ireland to benefit from the remittance basis of taxation.

Ireland, along with the UK, Malta, and Cyprus, are among the few jurisdictions that maintain a formal non-domiciled tax regime. 

The UK has recently modified its non-dom laws making them less attractive.

Nonetheless, Ireland continues to offer favorable tax treatment for non-domiciled individuals without imposing time limits or special charges.

To qualify as a non-dom in Ireland, an individual must first establish tax residency in Ireland for immigration purposes.

Then, they must demonstrate that they maintain significant connections to their home country rather than Ireland. 

These connections may include:

• Maintaining a home or property in a foreign country
• Keeping economic ties such as investments or business interests abroad
• Maintaining bank accounts and financial connections in the foreign country
• Having a will created in the foreign country
• Owning a burial plot in a foreign country

These factors collectively help establish that the individual’s permanent home remains outside Ireland, qualifying them for non-dom status for Irish tax purposes.

What Is the Difference Between Non-Dom and Non-Resident?

The distinction between non-domiciled status and non-resident status is fundamental to understanding Ireland’s tax system because each status comes with different tax implications.

Non-Domiciled Status

A non-domiciled individual is someone who is a tax resident in Ireland but maintains their domicile (actual legal home) in another country.

Despite living in Ireland, possibly for many years, these individuals have not established Ireland as their permanent home.

Additionally, they maintain the intention to eventually return to their country of domicile.

Non-dom status is based on intent rather than duration of stay in Ireland.

This means that if an individual can demonstrate that their roots remain elsewhere, they can potentially claim non-dom status for tax purposes.

Non-Resident Status

In contrast to a non-dom, a non-resident individual is someone who is neither resident nor ordinarily resident in Ireland for tax purposes in a given tax year. 

According to Irish tax law, an individual becomes a non-resident when they are not present in Ireland for the required number of days to trigger tax residency.

The tax implications differ significantly.

Non-residents are generally only taxable in Ireland on Irish-source income and gains.

Whereas, non-doms who are tax residents may be subject to Irish tax on worldwide income but can benefit from the remittance basis for foreign-sourced income.

Thus, allowing them to limit taxation to only what is brought into Ireland.

How Long Can You Be Non-Domiciled in Ireland?

Some other jurisdictions place time limits on non-domiciled status or impose additional charges after a certain period.

Nevertheless, Ireland does not impose any time restrictions on non-dom status. 

This means that an individual can potentially maintain their non-domiciled status indefinitely as long as they continue to meet the qualifying criteria.

The key factor in maintaining non-dom status is the individual’s intention regarding permanent residence.

To qualify as Irish domiciled, a non-dom would need to take up permanent residence in Ireland.

Additionally, they must demonstrate a clear intention of remaining for an indefinite period, with no intention of returning to their previous country of domicile. 

If an individual maintains connections to their home country and the intention to eventually return there, they can continue to claim non-dom status.

And yes, this is regardless of how long they have been resident in Ireland.

This absence of time limits on non-dom status is a significant advantage of Ireland’s tax system compared to other jurisdictions.

For example, the UK has introduced various changes to its non-dom regime over the years.

This includes special charges for long-term residents and deemed domicile rules that can affect individuals who have been UK residents for extended periods.

What is Remittance Basis of Tax in Ireland for Non-Dom Residents?

The practical application of Ireland’s remittance basis taxation for non-domiciled residents can be illustrated through concrete examples and specific rules that govern its operation.

Consider the example provided in the Irish Revenue guidance.

Example:

Mr. Brown, who has been living in Ireland since 1990, is resident and ordinarily resident in Ireland for the 2020 tax year but remains US-domiciled.

He has multiple income sources both within and outside Ireland:

• Irish employment income: €100,000 (not eligible for remittance basis, fully taxable)
• Irish rental income: €12,000 (not eligible for remittance basis, fully taxable)
• US rental income: €25,000 (eligible for remittance basis, only €6,500 remitted and therefore taxable)
• UK rental income: €17,000 (eligible for remittance basis, only €5,500 remitted and therefore taxable)

This example demonstrates how the remittance basis applies selectively to different income types based on their source and whether they qualify under Case III of Schedule D.

The remittance basis in Ireland specifically applies to income that is chargeable under Case III of Schedule D of the Irish tax code. 

This typically includes income from:

• Foreign investments and securities
• Foreign rental income
• Foreign pensions
• Certain other foreign income sources

When applying the remittance basis, several key principles must be understood:

1. The remittance basis applies only to individuals who are tax residents in Ireland but not domiciled in Ireland.
2. Foreign employment income attributable to duties performed in Ireland is fully taxable in Ireland and does not benefit from the remittance basis, even for non-domiciled individuals.
3. When remitting funds from accounts containing a mixture of capital and income, the Irish tax authorities consider the remittance to come first from the income portion until all income has been fully remitted. This prevents selective remittance of capital to avoid tax.
4. Proper record-keeping is essential to distinguish between capital, which may not be taxable when remitted, and income, which is taxable when remitted.

For high-net-worth individuals with substantial foreign income, the remittance basis offers significant tax planning opportunities.

By carefully managing which funds are brought into Ireland, non-domiciled residents can potentially maintain considerable income streams outside the Irish tax net while still enjoying residence in Ireland.

Is There a Non-Domiciled Capital Gains Tax in Ireland?

Ireland does impose capital gains tax on non-domiciled individuals, but the application of this tax depends on the nature and location of the assets being disposed of.

For non-resident individuals, which may include some non-doms, capital gains tax liability is generally limited to gains arising from specified assets located in Ireland.

According to Irish tax law, non-resident individuals are liable to capital gains tax on gains arising from the sale of Irish-specified assets.

These specified assets typically include Irish land, buildings, and certain shares deriving their value from Irish land.

The capital gains tax payment and filing deadlines for non-domiciled individuals are the same as for other taxpayers in Ireland:

• For disposals made between January 1 and November 30, payment is due by December 15 of the same year
• For disposals made between December 1 and December 31, payment is due by January 31 of the following year
• The capital gains tax return (Form CG1) is due by October 31 of the year following the disposal

Non-resident vendors, including non-domiciled individuals selling Irish assets, need to obtain a Personal Public Service (PPS) Number to complete the sale process.

This requires:

• Completing an application Form REG1 with the Department of Social Protection.
• Providing proof of identity, evidence of current address, and the reason for needing a PPS number.

For non-domiciled individuals who are resident in Ireland, foreign capital gains may benefit from the remittance basis of taxation.

It means that gains on non-Irish assets may only be taxable to the extent that the proceeds are remitted to Ireland.

Conclusion

The non-domiciled remittance basis in Ireland provides a compelling framework for non-domiciled residents to manage their international tax exposure.

This creates significant planning opportunities, particularly for high-net-worth individuals with international income sources.

Several key aspects of the Irish non-dom regime stand out as particularly advantageous:

First, there is no time limit on non-dom status in Ireland, unlike some other jurisdictions that impose additional charges or deemed domicile rules after a certain period.

This allows for long-term tax planning without forced changes to status.

Second, the system is relatively straightforward in its application, with clear distinctions between income types that qualify for the remittance basis and those that don’t. 

This clarity provides certainty for tax planning.

However, non-domiciled residents must be careful to understand the limitations of the system.

For those considering relocating to Ireland or already resident there, proper tax planning with professional guidance is essential, especially if they want to fully benefit from the remittance basis while ensuring compliance with all relevant tax laws.

With its combination of EU membership, English-speaking environment, and favorable tax treatment for non-domiciled residents, Ireland continues to be an attractive destination for internationally mobile individuals seeking to optimize their global tax position.

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