Form 12 Residency Status
From the 1st of January 2019, the Revenue online service requests users to state if they are resident in Ireland, if Ordinarily Resident and if Domicile in Ireland when completing a Form 11 or Form 12.
Revenue have decided to ask these questions as an individual’s Domicile and Residence affects how and where worldwide income is taxed. Many individuals are unaware of the rules and what the answer given could mean. Below we discuss what each means and what effect it can have on the declaration of foreign income.
Residency Status
An individual is regarded as resident in Ireland if:
- A minimum of 183 or more days are spent in Ireland in one year (January 1st – 31st December)
- 280 days within two tax years with a minimum of 30 days spent in each year
An individual will not be regarded as resident if a period of less than 30 days was spent in Ireland in a tax year and cannot be accounted for when assessing for the 280 day rule.
If in Ireland at any time of the day then an individual is deemed to be present when determining days spent in the country.
Ordinarily Resident
Once an individual resides in Ireland for a minimum of three consecutive years that person is then deemed to be Ordinarily Resident in the fourth year of residence.
An individual will continue to be deemed Ordinarily Resident of Ireland for a period of three years after date of exit from Ireland.
Domiciled
Domicile is a concept in general law and has not been defined in tax legislation. An individual is generally deemed to be domicile in a country if planning on living there permanently. There are two types of domicile:
Domicile of Origin
Each individual acquires a Domicile of Origin at birth, which is generally the domicile of the father. This Domicile does not change unless a new domicile is obtained.
Domicile of Choice
A Domicile of Choice can be obtained once clear evidence is shown that the individual plans to live permanently in the new country and does not intend on returning to the Domicile of Origin.
No person can be without a Domicile nor can more than one Domicile be selected at one time. If a person decides to abandon a Domicile of Choice then that person will automatically revert to the Domicile of Origin.
How Your Income is Taxed
Below we detail and give examples of the effect of Residence, Ordinarily Residence and Domicile have on the taxation of a person’s worldwide income.
Irish Resident, Ordinarily Resident & Domicile
(Example: An individual who was born in Ireland and has lived there all their life)
- Chargeable to Income Tax on all Irish Income
- Chargeable to Income Tax on Foreign Income
- If DTA (Double Taxation Agreement), Foreign Income chargeable in source country and credit given for tax paid
- No DTA, general rule Income charge in Ireland net of foreign tax paid
Irish Resident and Domicile but not Ordinarily Resident
(Example: An individual who has moved to Ireland 2 years ago and plans to never return to their domicile country or an Irish born person that has returned after multiple years abroad)
- Chargeable to Income Tax on all Irish Income
- Chargeable to Tax on foreign Income since 2010 (DTA Rules as above)
Irish Resident but not Domicile or Ordinarily Resident
(Example: A foreign citizen working in Ireland on a contract basis)
- Chargeable to Income Tax on any Income arising in Ireland
- Chargeable to Income Tax on any Foreign Income remitted to Ireland
Non Irish Resident, Domicile and Ordinarily Resident
(Example: An Irish person who has moved abroad within the last three years)
- Chargeable to Income Tax on Worldwide Income for three years after exit except for:
- Income from employment where duties are carried out abroad
- Income from trade & employment outside of Ireland
- Other foreign income below €3,810, above that threshold the full amount is chargeable in Ireland
Non Irish Resident and not Ordinarily Resident
(Example: An Irish person who has left Ireland a number of years ago or a foreign citizen with Irish source income)
- Chargeable to Income Tax on Irish source Income
Written by,
Breda Lyster
