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GAZETTE
APRIL 1994
(b) Neither Resident Nor Domiciled
Only assets situated in Ireland are
liable to the tax.
Residential Property Tax
(a)
Domiciled or Resident or
Ordinarily Resident
The operative date for liability is
April 5 each year. If an individual
is any of the above, they are liable
on worldwide relevant residential
property subject to the income tax
exemptions.
(b)
Non-Resident, Non-Domiciled
and
Not Ordinarily Resident
Only liable on property situated in
the State.
Commentary
If an Irish domiciled and resident
individual goes abroad to work, the
exemption for such person will not apply
if his salary is paid to an Irish Bank
account. An individual who goes to
work in the UK for more than three
months, even if paid in Ireland and
PAYE is deducted here, will also be
required to pay UK tax similar to PAYE.
The PAYE paid in the UK is refunded if
the individual works in the UK for less
than six months
17
. One cannot get an
Irish Revenue PAYE Nil Rating unless
an individual works abroad for more
than six months. The Irish Revenue will,
however, accept that a UK citizen
working in Ireland for less than six
months for a foreign company will not
be liable for PAYE in Ireland. For the
reliefs from Irish Tax to apply to an Irish
citizen domiciled and resident in Ireland
who goes abroad on a foreign assign-
ment, the Revenue will consider the law
of contract, where made and accepted,
and where the pay point is. To avoid any
difficulties the contract should be made
and accepted abroad, not subject to Irish
law and payment should be to and from
a bank account situated outside Ireland
of a non-Irish bank.
For the reliefs from Irish Tax to
apply to an Irish citizen domiciled
and resident in Ireland who goes
abroad on a foreign assignment,
the Revenue will consider the law
of contract, where made and
accepted, and where the pay
point is.
The current Revenue practice can be
summarised as follows:-
I
(a) A remittance basis exemption will
apply where an individual goes
abroad for part of a tax year and
will be taxed only on sums
remitted to Ireland. This relief is
not available to employments in
the UK.
18
(b) Where an individual goes abroad
to work in one tax year and
returns in a subsequent tax year,
tax will be levied on the
remittance basis. This equally
does not apply to UK
employments.
(c) Where an Irish resident takes up
full time foreign employment
abroad, exercised wholly outside
the State for a period including a
full tax year, the employment
income is not subject to tax even
when remitted provided the
individual will not be regarded as
resident in Ireland pursuant to the
General Residence Rules. This
relief does apply to UK
employments.
(d) Where an individual comes to this
country to exercise an
employment and remains here for
a period which includes a full tax
year, that individual is regarded as
an Irish resident for that year, and
the years of arrival and departure.
However, by concession any
foreign income arising before
arrival or after the date of
departure will not be included in
the assessment for those years. It
may be possible fqr some
individuals to avail of the
Diplomatic Relations and
Immunities Act, 1967. This not
only includes diplomats but also
individuals working for
specialised agencies of the UN
19
.
Such an individual may be exempt
from Irish tax regardless of the
Residence Rules. In addition, the
exempt income is not included in
his total income in relation to
taxation of Irish source income
20
.
Conclusion
When advising individuals on tax
minimisation while working abroad
their future plans must be clearly
identified. For example, by taking
action to avoid income tax the
principal private residence relief for
CGT may be lost.
When advising individuals on tax
minimisation whileworking
abroad their future plans must be
clearly identified.
As this article has shown there is often
a divergence between a strict
interpretation of the law and Revenue
practice. It must be borne in mind by
any individual going abroad to work
and intending to return that these
concessions will be withdrawn if the
Revenue interpret the individual's
j
principal reason for going abroad as a
tax avoidance exercise, as opposed to
legitimate employment or health
reasons where the tax avoidance was a
secondary consequence of such
actions.
Finally, the writer would caution any
practitioner when giving advice to
carefully consider individual tax
treaties with other countries. While
most are drawn up on the OECD
Model Treaty, there can be subtle
differences.
References
1. Ireland has a number of Double
Taxation Treaties with foreign
governments. While most are based
on the 1963 OECD Model Tax
Treaty, there can be anomalies
between different countries and
care must be taken in this regard.
2. The domicile is that of a person's
father. If a child is born after the
father's death, or is illegitimate, the
domicile is that of its mother.
3. Prior to October 2, 1986, a married
woman's domicile was that of her
husband. This was amended by the
Domicile and Recognition of
Foreign Divorces Act, 1986.
4. Article 4( 1) Double Taxation
Treaty. This replaces the provisions
j
originally introduced by the Income j
Tax Act, 1967 which confirmed
j
legislation going back to 1926.
5. Article 4(2) Double Taxation Treaty
(UK).
Ill