Expatriate tax ebook - Ireland
Basis of taxation
Charge to tax
Residence
Income from employment
Source of employment
Benefits (in kind)
Expatriate concessions
Relief for foreign taxes
Deductions against income
Charge to tax
A charge to Irish tax is dependent on whether the income arises in Ireland and the extent of the charge will be determined by an individual’s tax residency status.
Exposure to Irish tax will be determined by the expatriate's residence, ordinary residence and domicile status.
Tax residence in Ireland is determined by the expatriate's actual presence within a tax year. The expatriate will be treated as an Irish tax resident where:
- they spend 183 days or more in Ireland in any tax year, or
- they spend an aggregate of 280 days or more in Ireland over the course of two tax years where they will establish residence in the latter year.
The term ordinary residence is distinct from residence and refers to an individual's pattern of residence over a number of years.
As mentioned above the concept of tax residence is considered in conjunction with the concept of domicile. The test for domicile is complex and based on substantial case law. Usually an individual will domicile in the country they are born in.
An Irish tax charge arises on employment income derived from duties performed in Ireland.
Assessable employment income includes all wages, salaries, overtime pay, bonuses, gratuities, perquisites, benefits etc. There is also a requirement on the expatriate's employer to deduct Irish payroll withholding tax from the assessable employment income.
As mentioned above, where duties are performed in Ireland, any remuneration received in respect of these duties is treated as Irish source income and subject to Irish income tax regardless of the expatriate's tax residence status (subject to the relevant double taxation agreement).
Benefits (in kind)
In general, where the benefit is enjoyed in Ireland, an Irish income tax charge will arise. Therefore, housing, meal allowances, provision of a car and relocation allowances will come within the charge to Irish income tax in addition to the individual's salary.
Expatriate concessions
Individuals who are seconded to Ireland for a period of not greater than 2 years, may be able to receive tax free subsistence payments, subject to certain conditions.
Relief for foreign taxes
Where income has been subject to tax twice, in Ireland and a foreign jurisdiction, relief can be granted by the Irish Revenue Authority where provided for in the relevant double taxation agreement.
Deductions against income
Certain expenses can be provided by an employer free of income tax where they qualify as wholly, exclusively and necessarily incurred in the performance of the employment duties.
Contributions to an Irish Revenue approved pension scheme would be deductible from income – subject to specified limits.
Information about Ireland:
Last updated 6 May 2008
This publication is provided for general information purposes only and is not a comprehensive or complete statement of the issues it relates to. It should not be used as a substitute for advice on individual cases. Before acting or refraining from acting in particular circumstances, specialist advice should always be obtained. No liability can be accepted by Grant Thornton for any loss occasioned to any person acting or refraining from acting as a result of any material in this briefing. Grant Thornton is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business.
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Contact us
For further information on expatriate tax services in Ireland please contact Frank Walsh.