Foreign tax free salary - implications?

T

TwoWheels

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Hi all,
I will be moving to and working in the south pacific ocean for a minimum of 6 months, but for up to 5 years.
I will be paid in US$ by a local company tax free.
This can be paid to my Bank of Ireland account, or I can open an account with a local bank.
Will I be liable for tax in Ireland while I am away or on my return?
Any advice on any action I need to take before I go?
Many thanks.
TW.
 
The issue is one of residency for tax

put "residency" site:revenue.ie into google and a few links will come up.

The essence is if you pass the non residency tests then you are not liable for Irish income tax.

I would imagine that on your return you would need to declare any savings so as they can be treated as Capital..

As to where the mula goes I would have thought local best to reduce transfer costs/fees and exchange rates.
As noted by Capnhand below domicile is an issue also see here for starters
http://www.revenue.ie/en/personal/circumstances/moving/tax-residence.html
 
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You have several issues;
1. Residency. When you leave the country you must notify the Revenue that you are doing so. This has two advantages;
a) you will get a refund on any tax overpayments for the year you leave
b) you are setting yourself up for losing residency

2. PAYE/PRSI. As I understand, you are only liable for income you bring into Ireland. So if you get paid into a BoI account, you are liable for all of that income. You haven't mentioned if you are working as a contractor or what so I'm assuming that you are getting 100% salary.
If you establish and use a local bank, you will probably find yourself liable to tax in that jurisdiction. Tax has to be paid somewhere!

Which brings up the question, what do you mean "tax free"? Does the jurisdiction simply not have an income tax, or is the company using some loophole to avoid paying it?


3. If you establish an offshore account, you will only be liable to Irish tax on the money you bring back into Ireland. However, that brings up teh question of how to use the money sitting in the offshore account. You can't just use it to fund a lifestyle in Ireland when you return (Wasn't that what Ansbacher was all about???) as you are then evading income tax.

Ideally you will want to be able to pay the income tax in some low-tax country with a taxation agreement with Ireland, so you pay the tax in the low-tax regime and then transfer the funds back to Ireland with no further liability.

Most people I know with offshore accounts are not Irish, do not have Irish ordinary residency, and are intending to go back home with their loot at the end of a given period.


I'd advise you to get professional advice ASAP.
 
Hi

You need to seek professional advise on this as there is not enough information given to provide any definitive answer to your question.

For example you have not said whether you were domiciled (born) in Ireland or abroad. This forms a large part of the answer. Also where will the duties of the employemt be exercised and will any of the work be carried out in Ireland at all. Does the country have a tax treaty with Ireland?

Your first port of call should be your employer who should be able to give you some advise on the matter. Otherwise an accountant or tax advisor should be consulted.

Kind Regards

capnhand
 
There are a few things to establish before your tax situation can be decided:
Are you being seconded by your employer here, or working for a new company?
Where is the company based?
Where will your duties of employment being carried out?
It depends on how long you are out of the country, as you may remain tax resident in
Ireland if you don't stay abroad long enough.
Where are you domiciled?

The above is just a starting point, as this is a complex situation. You need to take professional advice.

www.taxingtimes.ie
 
Thanks all;
I am Irish & have paid a lot of tax in the last 20 years.
I am employed and working in the Solomon islands for a company with HQ in PNG.
I am paid a "Net" salary in US$ currently into my BOI account.
I own a mortaged home in Ireland (Not rented out)
I have brought my wife with me who is not earning any salary.

Hope that clears a few points up.
 
Your Irish tax situation will depend on how long you remain outside of Ireland.
If you remain Irish resident you will be taxable in Ireland on your worldwide income with a credit for any foreign tax paid.
If you are non-resident you will not be taxable on your foreign income, but taxable on any Irish source income (bank interest, dividends, rental income etc). If you are non-resident and eventually return to Ireland, and funds you bring back with you will be treated as capital and therefore not taxed.

You will need to confirm your Irish resident status, and depending if you have any other income you may need to prepare Irish tax returns each year.

Again, you should really take advice on this, as the above is just based on the limited information that you provided and is just a brief overview of what your situation could be. A meeting with a tax advisor would bring up all of the issues involved that could not be covered in a forum like this, as a face to face meeting or conversation could bring up further issues not mentioned.

www.taxingtimes.ie
 
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