Residence and Domicile

Due to Brexit there is renewed focus on residency and domiciliary issues.

Residence

A person is resident in Ireland for a tax year if either of the following applies

1. They are present in the State for 183 days in that tax year, or
2. They are present in the State for 280 days between that tax year and the previous tax year, with a minimum of 30 days in any one year.

Ordinary residence

The term ordinary residence refers to an individual’s pattern of residence over a number of tax years. If an individual has been resident in the State for three consecutive tax years, he/she is regarded as ordinarily resident from the beginning of the fourth tax year. On the other hand, he/she will cease to be ordinarily resident in the State having been non-resident for three consecutive tax years.

Domicile

There is no statutory definition of domicile but it is usually taken to mean the country which a person considers their natural home. Each person acquires a domicile of origin at birth, which in most cases is that of the person’s father. The original domicile is retained throughout a person’s life unless a domicile of choice is acquired. It is extremely difficult to change domicile and it would be necessary to sever all links with the country which is the domicile of origin and take up permanent residence in another country.

Example

1. If an individual has been travelling outside of Ireland since March 2019 and returned in January 2022, he/she will not be Irish tax resident for the tax years 2020 and 2021 .

2. If an individual was Irish tax resident for the tax years 2019,2020 and 2021 then he/she will be ordinarily tax resident in Ireland from 2022.

3. If an individual whose domicile of origin is Germany comes to Ireland for two years, he/she will not be regarded as abandoning their domicile of origin and acquiring Ireland as their domicile of choice.

If an individual is non-resident, ordinarily resident and non-domiciled in Ireland then he/she is liable to Irish tax on Irish sourced income in full and taxable on remittances of foreign sourced income. However, income for the following sources is exempt from tax:

· income from a trade, profession, office or employment, all the duties of which are exercised outside Ireland; and

· Other foreign income, e.g., investment income, provided that it does not exceed €3,810 in the tax year in which it is earned

If an individual is  non-resident, non ordinarily resident and non-domiciled in Ireland he/she is liable to Irish tax on Irish sourced income in full and taxable on foreign sourced income in respect of a trade, profession or employment exercised in Ireland.