Domicile and offshore account question

B

bonny

Registered User
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Hello folks
I hold a uk passport have lived in Ireland and payed paye for 12 years. Married to an Irish man. I still own a property in uk and have bank account there.

Can i claim UK to be my domicile for tax purposes?

My Dad died recently and left me around 300,000 sterling, can i put it offshore and not pay tax?

Would appreciate any advice.
Bonny
 
From the information given, it would appear that you are domiciled in ireland for tax purposes. The fact that you hold UK citizenship doesnt change the fact that you live, work and pay tax in Ireland. I dont think you are going to find a tax free haven for this money but perhaps a family member in the UK can point you in the direction of tax advice.
 
Thanks for your reply, I wonderd if I would fall under the remmitance basis. Although I live in Ireland I still consider my home to be Britain.
 
There's nothing in your original post that would categorically confirm that you are domiciled in Ireland.

As you've been resident in Ireland for more than 3 consecutive tax years it will make no difference whether you're domiciled here or not. You'll be subject to inheritance tax on worldwide inheritances.
 
I responded to your post because I see myself in a similar situation but in my case Im not an EU citizen, but married to Irish citizen and residentand working here for many years. The question of domicile for tax purposes in my own case is simple enough as I only travel to my "home" country for holidays. Many factors will inform your status re UK residency and inheritance tax and I would suggest that you ring the British Embassy here and run your scenario past them for the correct advice. My embassy offers tax assistance and I assume the British one does too. good luck.
 
Your domicile is mainly determined by the domicile of your father and has less to do with where you are tax resident.

I have a lot of experience in this area as a UK domicile myself.

Marc
Chartered financial planner (uk) certified financial planner (Ireland)
 
Lsquared said:
I responded to your post because I see myself in a similar situation but in my case Im not an EU citizen, but married to Irish citizen and residentand working here for many years. The question of domicile for tax purposes in my own case is simple enough as I only travel to my "home" country for holidays. Many factors will inform your status re UK residency and inheritance tax and I would suggest that you ring the British Embassy here and run your scenario past them for the correct advice. My embassy offers tax assistance and I assume the British one does too. good luck.
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With all due respect the concept of domicile is far from simple. There's no statutory definition and 2 cases with seemingly identical circumstances could be found to have different outcomes.

An individual is born with a domicile, ususally that of the father or country of birth. An individual can change domicile and the onus would generally be on the individual to prove the change.

From what OP has said she was born UK domiciled. Although she lives in Ireland, is married to an Irish man etc doesn't necessarily mean she has lost her UK domicile. If a continuous and lasting connection with the UK can be demonstated then the UK domicile would not be lost.

A quick search on the British Embassy website shows it does not offer tax advice and specifically states that it doesn't give legal advice. In any case, it would hardly be independent if it did!

This is all academic anyway. As I said in my first post the fact that OP has been here for more than 5 years means she is subject to Irish capital acquisitions tax on worldwide inheritances.

She needs to take proper tax advice.
 
Thanks for your input. The estate is being administerd in the uk and will be subject to inheritance tax. Will I pay another tax after that here in Ireland. I wasnt planning on remmiting it to this country.
 
There is a really good tax planning opportunity here but you need the right kind of underlying instruments get it wrong and it will cost you 30%pa get it right and there is no tax to pay. This is one of the best examples I know of where a competent adviser can really add value.
 
bonny said:
Thanks for your input. The estate is being administerd in the uk and will be subject to inheritance tax. Will I pay another tax after that here in Ireland. I wasnt planning on remmiting it to this country.
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Whether you remit it or not you will still be liable to Capital Acquisitions Tax in Ireland. As you've been here for more than 5 years the remittance basis isn't available to you.

Some credit for UK tax paid should be available against the Irish tax liability.

This is a very specialised area and you really need to get proper professional advice.
 
Hi again.

I cant find anywhere that states a 5 year timeframe regarding domicile. Do you have the link?

I have just read a part of the Revenue Operational Manual (5.1.21A) The remittnce basis of Assessment and it seems to me that as a non dom i will be assessed on capital gains/ aquisition but not on subsiquent income if it is kept offshore and not remitted.
What do you think?

I will go and see an accountant, a solicitor dealing with it in the uk and charging a fortune for the pleasure.

Does inheretence tax work out higher here? In the uk it is 40% over 325 k

Thanks for all your advice.
Bonny
 
Section 6(4) of Capital Acquisitions Tax Consolidation Act, 2003. It's a provision to prevent people who are here on a temporary basis being liable to CAT on overseas gifts/inheritances.

The Revenue manual you refer to is for income tax. The remittance basis for income tax is only available to individuals that have been tax resident in Ireland for less than 3 consecutive tax years. You become ordinarily resident if have been resident for the previous 3 tax years.

As you are resident and ordinarily resident in Ireland you are liable to tax on your worldwide income and gains, whether remitted or not.

The UK and Irish inheritance tax regimes are so different it's nearly impossible to compare. The UK effective rate on an inheritance of £500k is reasonably straighforward to calculate (500-325*40%=70k or 14%); whereas the tax on a similar inheritance in Ireland could range from nil to 30% depending on the number of beneficiaries, the relationships between the beneficiaries and the disponer, and any previous gifts or inheritances taken by the beneficiary.
 
Again, you need the right underlying instrument in order to avoid CGT on gains and separate income from gains and income needs to be carved out into a separate account.

This is a relatively simple process and wouldn't require an accountant.
 
Marc said:
Again, you need the right underlying instrument in order to avoid CGT on gains and separate income from gains and income needs to be carved out into a separate account.

This is a relatively simple process and wouldn't require an accountant.
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The issue is the avoidance of double taxation on capital acquisitions tax not capital gains tax, or income tax. The charge to Irish CAT will arise regardless of how the inheritance is invested.

OP is subject to Irish tax on worldwide income and gains. 'Carving' out income from gains isn't going to change that.
 
Hi again,

"As you are resident and ordinarily resident in Ireland you are liable to tax on your worldwide income and gains, whether remitted or not."

So how does the question of domicile fit in with the remittence basis of taxation?

The disponer is my Dad, Im the only benficiary, Approx 500k, will I have extra to pay here in Ireland after Ih tax paid up in UK?

Thanks for your reply
Bonny
 
Exactly my point.

The key here is to determine your domicile to establish if the remittance basis applies.

Assuming you are uk domiciled you can avoid Irish CGT on gains that you do not remit.

The UK IHT / Irish CAT question is a bit of a red herring since UK IHT would be paid by your Father's estate and any planning in this regard should have already been done. The only possible exception being the possibility of arranging a deed of variation if all the beneficiaries to the Will are over 18. This is where there may be some scope to vary the beneficiaries depending on the CAT impact.
 
bonny said:
...

So how does the question of domicile fit in with the remittence basis of taxation?
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It doesn't for CAT. But to clarify my my earlier statement, non-Irish domiciled individuals are not liable to CGT on gains on disposal of non-Irish assets where the proceeds aren't remitted.

bonny said:
...
The disponer is my Dad, Im the only benficiary, Approx 500k, will I have extra to pay here in Ireland after Ih tax paid up in UK?

Thanks for your reply
Bonny
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It looks like there will be an Irish tax liability but you should get credit for UK tax paid. You need to sit down with a tax adviser to determine exactly what that will be.
 
Thanks, I am due to meet someone next week. Will post their take on the situation... Would prefer my Dad back anyday though, he was super savy with money and I would hate to mess up. He died young he had just started his IHT planning gifting his 3k a year but got caught out.. He would hate to think his hard earned cash being lost in taxes.

Bonny
 
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