The tax residence rules for individuals in ireland

A person's exposure to Irish income tax, CGT and gift and inheritance tax is determined, in large part, by that person's residence, ordinary residence and domicile status.

Understanding how these rules applyto you will help to limit exposure to Irish income tax, PRSI and USC.

It is important to note that a person may be liable to Irish tax even without being resident if employed under an Irish contract of employment, a salaried director or if performing duties of a non-Irish employment in Ireland.

Understanding the nature of an indiviual's employment, the activities performed in Ireland and tax residence status is a critical for management of tax exposures.

The test of residence is based solely on physical presence during a tax year.

A person is resident if that person spends either of the following:

• 183 days in Ireland during the tax year, or
• 280 days in Ireland over two consecutive tax years (with at least a presence of 30 days in the second tax year).

Generally, a day is counted when an individual is present in Ireland for any part of that day.

An individual becomes "ordinarily resident" in Ireland for a tax year after being resident here for three consecutive tax years.

Likewise, a person ceases to be "ordinarily residence" once that person has been non-resident for three consecutive tax years.

Ordinary residence is particularly important as a person may be taxable in Ireland if not actually resident but still ordinarily resident.

As an example of this, a person can be liable to Irish CGT if "ordinarily resident" even though no longer resident in Ireland. In this situation, if the person is non-domiciled (see below) then tax will only arise ot the extent that funds are remitted into the country.

A person that is resident, ordinarily resident and domiciled in Ireland for 2024 is liable to tax on all worldwide income and gains.

Generally speaking, a person that is non-resident while ordinarily resident and domiciled in Ireland for 2024 is liable to tax on:-

• Irish employment, trade or professional income
• Foreign employment, trade and professional income where duties are performed in Ireland,

A person that is non-resident and not ordinary resident is only be liable to tax on Irish source income and capital gains on "specified assets".

Domicile is a legal concept and can be broadly defined as a person’s natural home.

Domicle provides an important 'override' for expatriates and other individuals coming or returnig to Ireland for employment purposes or to make investments here.

Individuals that acquire residence or ordinary residence status are subject to tax and CGT on the "remittance basis". This means that liability to tax on income and gains arising outside Ireland is limited to amounts of remitted or brought into the country.

This is an important tax planning consideration for individuals with interests in Ireland who are domiciled outside the country.

Apart from income tax, individuals that intend to spend more than five years in Ireland must give consideration to the impact of residence on their exposure to gift and inheritance tax.

Usually, a gift or inheritances tax exposure in Ireland will arise if:-

• the person that made the gift or inheritance is resident in Ireland,
• the recipient of the gift or inheritance is resident in Ireland, or
• the subject of the gift or inheritance is located in Ireland (e.g. a commercial property).

There are exceptions to these rules for individuals that are non-Irish domiciled, however these exceptions lapse and must be considered well before a person has been here for five years.