The below information provides a brief summary of the Irish income tax rules that apply to an individual moving to Ireland with specific regard to receipt of employment income during this period. This document is for information purposes only and does not purport to represent legal or taxation advice.
In general, the criteria used to determine an individual's liability to Irish income tax on his/her employment income (hereafter referred to as his/her "remuneration") are his/her residence, ordinary residence and domicile status.
Fundamental Concepts – Residence, Ordinary Residence and Domicile
Please note that for the purposes of the below a tax year for Irish income tax purposes is aligned with the normal calendar year (i.e. the tax year 2012 refers to the period 1 January 2012 to 31 December 2012).
1.1. Irish Resident
An individual will be regarded as being resident in Ireland for a tax year if he/she is present in Ireland: (1) for a period of at least 183 days in that tax year; or (2) for a period of at least 280 days in any two consecutive tax years, provided that the individual is present in Ireland for at least 31 days in each period. In determining days present in Ireland, an individual is deemed to be present if he/she is in Ireland at any time during the day.
It is possible for an individual who is not tax resident in the year of arrival in Ireland (i.e. he/she does not meet the above condition of Irish tax residence) to elect to be Irish tax resident for that year. Certain conditions must be met for this election to be utilised, for example, the individual must be able to evidence to the satisfaction of the Irish Revenue Commissioners that he/she will be Irish tax resident in the following tax year.
1.2. Ordinarily Resident in Ireland
An individual will be regarded as ordinarily resident for a particular tax year if he/she has been Irish resident for the three previous consecutive tax years (i.e. he/she becomes ordinarily resident with effect from the commencement of the fourth tax year). An individual will remain ordinarily resident in Ireland until he/she has been non-Irish resident for three consecutive tax years. Thus, an individual who is resident and ordinarily resident in Ireland in the tax year 1 January 2012 to 31 December 2012 and departs from Ireland in that tax year will remain ordinarily resident up to the end of the tax year 1 January 2015 to 31 December 2015.
1.3. Irish Domicile
Domicile is a concept of general law. It may, broadly speaking, be interpreted as meaning residence in a particular country with the intention of residing permanently in that country. Every individual acquires a domicile of origin at birth, usually that of his/her father. A domicile of origin will remain with an individual until such time as a new domicile of choice is acquired. However, before that domicile of origin can be discarded, there has to be clear evidence that the individual has demonstrated a positive intention of permanent residence in the new country and has abandoned the idea of ever returning to live in the "domicile of origin" country. For example, an individual with an Irish domicile of origin who lives abroad for a number of years and then returns to Ireland would not be regarded as ever having abandoned his/her Irish domicile of origin.
Tax Treatment for Irish Resident Individuals
An individual who is tax resident in Ireland for a tax year is liable to Irish tax on his or her worldwide income and gains for that tax year. In this way, he/she will be subject to Irish income tax in respect of his/her employment remuneration regardless of where the duties are performed (however, please see below regarding special rules for "year of arrival" and "remittance basis" for non-domiciled individuals). Where appropriate, a credit against Irish tax may be due under the terms of a double taxation agreement in respect of foreign tax paid on foreign source income and gains that are assessable here.
2.1. Year of Arrival
It is possible for an individual who is resident in Ireland (i.e. he/she meets the condition of Irish tax residence in Section 1.1) for the year of arrival to not be taxed on remuneration from an employment exercised outside Ireland in the part of the year before he/she arrived in Ireland. For this to apply, certain conditions must be met - including that the individual must be able to evidence to the satisfaction of the Irish Revenue Commissioners that he/she will be Irish tax resident in the following tax year.
2.2. Non-domiciled individuals and the remittance basis of assessment
The remittance basis of assessment applies to foreign sourced income and foreign capital gains of an individual who although tax resident in Ireland for a tax year is not Irish domiciled for that tax year. Under the remittance basis of assessment, the non-Irish income and gains are taxable only to the extent that they are remitted to Ireland.
However, such an individual will still be liable to Irish income tax in any event on all remuneration derived from an Irish employment and will be liable to Irish income tax on remuneration derived from non-Irish employment to the extent that duties of the employment are performed in Ireland (or where the income from the non-Irish employment, the duties of which are not performed in Ireland, are remitted to Ireland).
Tax Treatment for Non-Resident Individuals
3.1. Individual is Non-Resident but is Ordinarily Resident in Ireland
Such an individual is treated in the same way as an individual who is tax resident (as above). However, he/she will not be taxable on remuneration from an employment (or from income...