Can a non-resident take invest in a PRSA?
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Thanks Slim. It's not about getting relief on tax on the rental income, at least not directly. The idea would be that my wife could take out a small PRSA and then draw down as soon as possible to avail of the Employee Tax Credit, which would be usable against rental income. The taxation rights to these pension funds is retained by Ireland and they are treated by Revenue as PAYE income are they not?
Steven Barrett
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There are rules around marketing to non residents. Most life companies won't allow it. It's too much hassle for them.
Most but perhaps not all Steven? Or none would you say? What happens when Irish residents take out a PRSA and then leave the country? Would the life company terminate the arrangement? An Irish postal address is no problem for initial setup, should that be the only hurdle.
Gordon Gekko
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The reference to rental income is a red herring. Your query relates to investing after-tax money in a PRSA. The source of that money isn’t relevant.
As I understand it, no company will facilitate a PRSA for a non-resident. It’s different when someone already has a PRSA and leaves Ireland, he or she can retain it.
As I understand it, no company will facilitate a PRSA for a non-resident. It’s different when someone already has a PRSA and leaves Ireland, he or she can retain it.
T McGibney
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If she has separate income in her own right outside Ireland, this won't work anyway. If she hasn't, she should be entitled to the normal individual personal credit in Ireland in respect of Irish rental or other income.
Steven Barrett
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ITC probable will but they don't want small PRSAs. It's not their model. Life companies won't do it.
Gordon Gekko
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Do they not need a licence or passport of some kind to distribute PRSAs to people outside of Ireland? Why would they bother?
Steven Barrett
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I don't know what their requirements are but they have done business for non residents before.
The OP is talking about setting up a small PRSA and drawing it down immediately. They won't do that as there is no money in it, only a cost.
Most of the comments so far seem to be saying that there is no legal impediment to opening a PRSA as a non-resident but that it's not the done thing. That stuff seems like a surmountable problem. My wife could "move" to Ireland, open a PRSA and then "move" to Germany. If it's not legally prohibited then nobody would care as it would all have been done using Irish contact details. But your comment seems to torpedo the whole idea based on tax law, which clearly I would not look to break and would make my question superfluous as I am not looking to open a PRSA as a vehicle to actually save for my wife's retirement. She has that taken care of here in Germany using German tax incentivised vehicles.
Can you please explain in more detail what you mean. Do you mean that by having PAYE type income in Germany, she would not be entitled to the Employee Tax Credit in Ireland based on her receiving ARF distributions, which I believed were treated like PAYE income (taxed at source by the fund managers and tax, PRSI and USC remitted at source to Revenue) and beneficiaries were thus eligible to claim the Employee Tax Credit (formerly PAYE tax credit). Is this assumption mistaken?
Yep it's a red herring in the usual sense as the money to fund the PRSA would not come from the rental income. The rental income was mentioned because the only reason for my wife taking out a PRSA would be to avail of the Employee Tax Credit and use this against her income tax liability on the rental income once the PRSA was converted to an A(M)RF. That was the hope anyway but it seems this may not be allowed either.
T McGibney
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According to Revenue, and as stated on annual Form 11 tax returns, "A non-resident is not due any tax credits or reliefs except as provided for in S. 1032(2)." If they are non-resident and with Irish source income, they can claim under S. 1032(2) a portion of allowances/reliefs as follows
The amount of their Income chargeable in the State Divided by The amount of their World Income (includes income chargeable in the state)
So if your wife has €10,000 Irish source income and another €30,000 foreign source income, the reliefs, allowances or credits they can claim is restricted to 10,000/(30,000+10,000) = 25% of the normally applicable sum of the reliefs, allowances or credits.
More generally your plan seems to be predicated on going to a lot of trouble to secure what is to all intents and purposes a minor tax relief.
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Yes I understand the apportionment aspect as I fall under that rule myself right now, though there is the caveat that if one is non-resident and an Irish or EU citizen and over 75% of worldwide income is Irish sourced, then the reliefs are due in full. Would my wife be entitled to the Employee Tax Credit (apportioned) under S. 1032(2)? Or does this only apply to the personal tax credit?
I don't really see opening a PRSA as going to a lot of trouble if the ARF or annuity at the end allowed my wife to claim an apportioned Employee Tax credit. As she gets older that percentage of her income that derives from Ireland would increase as she would leave the workforce and only receive a pension here in Germany. Idk, the Employee tax credit is how much, €1700? Even if she was only entitled to as little as 25% of it indefinitely it's €425 cash in her pocket a year. That's a nice free holiday every 10 years in fairness. Worth a bit of paperwork surely if I can get someone to open the PRSA?
I don't really see opening a PRSA as going to a lot of trouble if the ARF or annuity at the end allowed my wife to claim an apportioned Employee Tax credit. As she gets older that percentage of her income that derives from Ireland would increase as she would leave the workforce and only receive a pension here in Germany. Idk, the Employee tax credit is how much, €1700? Even if she was only entitled to as little as 25% of it indefinitely it's €425 cash in her pocket a year. That's a nice free holiday every 10 years in fairness. Worth a bit of paperwork surely if I can get someone to open the PRSA?
T McGibney
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Have you a source for this? The structure set out on Form 11 certainly doesn't support this.
That's your call. My observation stands.
It's EU (or UK resident), not citizen of as I stated, but this applies in our case:
I have asked Zurich if they will open a PRSA for my wife. I'm an existing life customer of theirs in Ireland, FWIW (probably nothing) but the residency stuff is the easiest thing to get past as it is not seemingly breaking any laws to take out a PRSA as a non-resident. It's just something PRSA providers don't like doing. But what they don't know won't hurt them
If your wife has no employment in Ireland how would she be entitled to take out a PRSA? I thought that a PRSA is intended to encourage people to provide for their retirement. Revenue have to issue a certificate to approve a PRSA. If no employment, no PRSA, no? If she can open an ordinary investment account, would some of the gain be offset by her Personal Allowance, if she registered for tax in Ireland?
AEOI is one issue. (Automatic exchange of information). Insurance contracts, including pension and PRSAs would also be subject to these AEOI requirements. While you might think that what the insurance co doesn’t know might not hurt them you don’t know what unintended consequences that might have for your spouse.
All firms/insurers registered and regulated in the ROI would have to comply with the minimum competency requirements. Any firm /insurer authorised/registered with the CBoI are not subject to these MCRs when providing services in other EU/EEA states e.g to a non-resident. However they must comply with corresponding host state requirements. Some insurers may have global tax and compliance functions who will review the compliance with the host state requirements in instances such as you describe and will confirm on that basis whether or not they can accept your business.
There is a declaration on most providers forms which will ask you to state whether or not the contract was sold, signed or completed outside Ireland so that they can capture this. I think its the Consumer Insurance Contracts Act that sets out the remedial steps that insurers can take where misrepresentation is identify post setup of a policy/contract.
There are probably some other reqs that I’m forgetting about but these few are a start.
All firms/insurers registered and regulated in the ROI would have to comply with the minimum competency requirements. Any firm /insurer authorised/registered with the CBoI are not subject to these MCRs when providing services in other EU/EEA states e.g to a non-resident. However they must comply with corresponding host state requirements. Some insurers may have global tax and compliance functions who will review the compliance with the host state requirements in instances such as you describe and will confirm on that basis whether or not they can accept your business.
There is a declaration on most providers forms which will ask you to state whether or not the contract was sold, signed or completed outside Ireland so that they can capture this. I think its the Consumer Insurance Contracts Act that sets out the remedial steps that insurers can take where misrepresentation is identify post setup of a policy/contract.
There are probably some other reqs that I’m forgetting about but these few are a start.
Would all this stuff not also apply to an Irish resident who becomes non-resident after opening the PRSA? Do life companies terminate PRSAs where customers become non-resident after the fact?