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GAZETTE
AUGUST/SEPTEMBER
1994
Ireland before they lose the ordinary
residence status. Former residents of
Ireland will continue to be subject to
Irish Capital Gains Tax for three tax
years after their departure.
DOMICILE
Domicile is relevant in determining an
individual's liability to taxation. The
Finance Act 1994 contains no changes
in regard to Irish domicile. Domicile is a
legal concept, and is substantially inde-
pendent of either residence or ordinary
residence. Domicile of origin is acquired
at birth from the country where an
individual's father is or was in turn
domiciled. This domicile of origin can
only be replaced by a new domicile of
choice in the event of a permanent and
intentionally irrecoverable severance of
ties with the domicile of origin in favour
of a new domicile. In general for most
individuals, domicile and nationality are
the same. Domicile is important in
determining the base for gift and
inheritance taxes in Ireland. Irish
domiciled individuals are subject to gift
and inheritance tax regardless of either
their residence or situation of property.
Non-Irish domicile is important in
establishing the favourable
"remittance" basis of taxation. A
person who is Irish resident but not
domiciled in Ireland, has their tax base
determined as respects non-Irish - non-
UK income by reference to remittances
of income to Ireland rather than
income actually arising.
Example
-A US National working in
Ireland who is paid by a US
Company will be subject to
tax in respect of the
employment income only to
the extent of the amount of
income actually remitted or
consumed in Ireland. This in
effect is a tax deduction for
savings and has made
Ireland an attractive location
for ex-patriot employees and
for ex-patriots with
significant
overseas
investments, since the extent
of liability to Irish Tax is in
respect of remittances only
rather than the total income.
The charts on the left contain brief
details of the tax liability created by
the new residence rules.
*Rory O 'Riordan is a partner in the
firm Partners at Law, Solicitors.
•
Extent of
Liability
INCOME TAX
Worldwide
Income
Worldwide
income less
income from a
Remittance of
trade, profession
non-Irish non-
or employment
UK Income
carried
on/exercised
outside Ireland.
UK and Irish
source income
Irish source
income
Resident,
ordinarily resident
and domiciled
Non-resident but
ordinarily resident
and domiciled
Resident but not
domiciled
Non-Resident and
non ordinarily
resident
Extent Of
Liability
CAPITAL GAINS TAX
Worldwide gains
Remittance gain from
o/s I RL and UK
UK source gain
Irish gains
Irish Gains on specified assets
• Land or buildings in the
State
• Minerals in the State
• Exploration or exploitation
rights in the Continental
Shelf
• Unquoted shares deriving
the greater part of their
value from such assets as
mentioned above
• Assets of a business carried
on in the State
Resident or ordinarily
resident and domiciled
Resident or ordinarily
resident but not
domiciled
Non-resident and non
ordinarily resident
THE INCORPORATED LAW
SOCIETY OF IRELAND
LAW SCHOOL
CONTR I BUTORS
T h e S o c i e ty w i s h e s t o e n h a n c e
its p o o l o f c o n t r i b u t o rs f o r t h e
L a w S c h o o l t r a i n i ng c o u r s e s,
b o t h at c o n s u l t a nt a n d t u t o r
l e v e l. P r a c t i t i o n e rs i n t e r e s t ed in
c o n t r i b u t i ng t o t h e t r a i n i ng
p r o g r a m m e s h o u l d s p e c i fy
t h e i r a r e a o r a r e a s o f s p e c i a l i ty
a n d f o r w a r d a full C V t o:
A l b e r t P o w e r ,
L a w S c h o o l P r i n c i p a l,
I n c o r p o r a t ed L a w S o c i e t y
o f I r e l a n d,
B l a c k h a ll P l a c e,
D u b l i n 7 .
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