How long does it take to be classed Non Tax Resident

[lexi82]

Hi

Planning on working abroad on a 6 month contract from October 2017.
This may get extended or I may go and do similar in another county.
What is the minimum amount of time I need to be out of Ireland for to be counted as non tax resident.

For example, If I came back to Ireland to work in 2019, would I be counted as non resident from date of leaving?
I understand the 183 days rule but not sure about the 280 days.

Thanks

 

[Taxpert]

Hi

You are tax resident here in any given year if you have either

1. Spent 183 days here in that year OR

2. Spent a total of 280 days in that year and the previous year combined.

However, if you are relying on rule 2, a period of up to 30 days will be ignored ( I.e. You will not be regarded as resident here in a year if you are less than 30 days here)

Be careful, though, on "ordinarily resident" . Being OR can drag you into the tax net under certain circumstances. You will continue to be OR until you have spent a minimum of 3 consecutive years as a non-resident.

To take your example, if you left on 1/10/2017, you would have 273 days here in 2017, and would therefore be tax resident here for 2017.

If you were away for all of 2018, you would have 0 days here so you aren't resident under the 183 day rule. Under the 280 day look back rule you do not break the 280 rule (273 days) so you are not resident for 2018. You could spend up to 30 days here, and still not be resident. However if you spent 31 days here you have 273 + 31 = 304 days in total and would be resident. So be careful on holidays!!

If you came back, on say July 1st 2019, you would have 183 days here and become resident under the 183 day rule. If you came back on say August 1st you are not caught under the 183 day rule. For the 280 day look back, you have 153 days plus whatever you spent here in 2018. If that were, say, 31 days your total is 153+31 = 184 and thus you escape under the 280 day rule.

Simple really. In the above scenario you would be ordinarily tax resident for 2017, 2018 and 2019 (and 2020 even if you stayed out for 2019).

Watching date of departure, and particularly date of return is important.

There is one other thing to watch out for - a thing called split year relief. In the 2017 scenario you are tax resident here for 2017 and your earnings after you leave are liable to tax here. If you make a declaration to revenue that you are leaving with the intention of not being tax resident in 2018, then they will stop your 2017 clock the day you leave (and any earnings after you leave for 2017 are not liable for tax here).

A similar mechanism applies in the year you return, thus protecting your foreign earnings from Irish tax up to the date of your return.

All clear?

 

[lexi82]

Thanks a mil for taking to the time to write a detailed response. Great to see it illustrated out. Explains the rules well.

Ideally I would be away for all of 2018, but only a six month contract at present.

Would it be appropriate to elect for split year relief even though I’m not 100% sure when I will return?

If I spend all of 2018 abroad (less than 30 days in Ireland, and return some time in 2019, is it correct that If I elect for split year relief upon leaving - my income earned abroad from 2017 to when I return to Ireland would not be subject to tax in Ireland
(Even if I would end up being tax resident in 2019 i.e came back prior to August 2019)

 

[Taxpert]

The split year relief is intended for those who are bona fide going abroad for more than a short period.

The rules state that you are leaving with the intention of not coming back next year. Key word is intention. However if you leave for a six month contract you can hardly argue you intend to stay out for the next year.

Your second question is interesting. As you would be ordinarily tax resident you would be liable for tax on money sent back into the country. However if you have split year relief this would not apply to any salary earned while abroad.

Your best bet might be to get your employer to indicate that an extension of the 6 months is a possibility.

 

[lexi82]

Thanks Taxpert.

I would go travelling if I didn't get a contract extension. One way or another I don't have any intention of coming back in 2018.

I will give Revenue a call re: split year relief. I assume it can be granted retrospectively if they don't have sufficient evidence upon leaving Ireland?

 

[Taxpert]

I wouldn't bother giving them a call.

If you're going to be gone for 2018 simply write to them saying you are leaving with the intention of not being tax resident here in 2018 and accordingly apply for split year releif.

It's important when you return because the reverse works - if you came back, in say may 2019, any earnings abroad between January and date of return would not be subject to Irish tax.

 

[lexi82]

Is it as simple as just writing a letter? I thought I might need to provide some evidence or something.

Also, if you apply for split year relief, do you automatically get a refund of any tax over-payment in 2017 or do you need to separately apply for that?

 

[Taxpert]

You simply write to them, as I have indicated.

when you do your 2017 tax return, It's likely you may get a rebate depending on circumstances as you will probably not have used up al your annual tax credits.