Introduction to Income Tax

Individuals and non-corporate persons

Income tax is charged on income of individuals, unincorporated bodies (s 1044), trustees (s 1046) and personal representatives (s 799).

Income of partnerships and European Economic Interest Groupings is charged on the individual partners (s 1008) or grouping members (s 1014).

Tax year

Income tax is charged on income arising in a tax year. The tax year coincides with the calendar year, for example, the tax year 2011 runs from 1 January 2011 to 31 December 2011.

Residence

Resident individuals

If you are resident and domiciled in the Republic of Ireland, you are liable to Irish income tax on your total income from all sources, i.e., your worldwide income.

You are regarded as resident in the Republic of Ireland if you spend:

(a) 183 days or more in the Republic of Ireland in a tax year, or

(b) an aggregate of 280 days in the current and preceding tax year.

Presence in the Republic of Ireland of not more than 30 days in a tax year is ignored for the purposes of the two year test (s 819). You are treated as present in the Republic of Ireland for a day if you are present at any time during the day.

Non-domiciled individuals

If you are resident but not domiciled in the Republic of Ireland (for example, a foreign national living in Ireland), you are only taxed on foreign income to the extent that it is remitted to Ireland (s 71). This “remittance basis” also applies in the case of an individual who is resident but not ordinarily resident in the Republic of Ireland. The remittance basis extends to UK source income (since 1 January 2008).

If you are non-Irish domiciled, and employed in the Republic of Ireland (ROI) but paid from abroad by your foreign employer, you can opt to be taxed on the greater of:

(a) the amount you remit into the ROI,

(b) €100,000 plus half of your salary in excess of €100,000.

Non-Irish-resident individuals

If you are non-Irish-resident, you are taxed on your Irish source income, i.e., income arising in the Republic of Ireland. If you are non-Irish-resident but ordinarily resident in the Republic of Ireland, you are liable to Irish tax on foreign investment income in excess of €3,810 in the tax year. You are not liable in respect of income from an employment or trade carried on abroad (s 821).

You are regarded as ordinarily resident in the Republic of Ireland for a tax year if you were resident in the Republic of Ireland in each of the three immediately preceding tax years. You cease to be ordinarily resident when you have become non-resident for the three immediately preceding tax years (s 820).

If you are a resident of a country that has a tax treaty with Ireland, you may be exempt, or due a credit, in relation to tax on Irish source income if that income is also taxed in the treaty country (see Double Taxation).

If you are an Irish citizen and Irish domiciled, but resident abroad, you may be caught for the domicile levy (€200,000 per annum) if:

(a) your world-wide income exceeds €1m,

(b) your Irish located property is worth more than €5m, and