Remittance basis

Hi all

I have read few threads on this topic but answer is not very clear to me. There are many knowledgeable people on this forum so looking for some opinions.

I was not born in Ireland, moved here roughly 15 years ago and subsequently acquired Irish citizenship through naturalisation as it saved me from visa issues. So currently I hold dual nationality - of Ireland and my country of birth (non-EU). I still have strong family links to my home country, visit there every year, still hold a bank account there and own a piece of land. I actually married my wife there couple of years ago who is a national of my home country. We intend to move back there in a few years or when we retire (in 10 years or so). We have no children but this may change.

On the basis of this, I understand we can avail of Remittance basis of taxation if we were to acquire a rental property in my home country and receive income there (or say on dividends of UK or USA listed company shares) as long as we don't remit that income to Ireland. Is my understanding correct?

It is not clear to me if acquiring Irish citizenship or owning PPR here changes our domicile if we don't intend to reside here permanently. To prepare for this, last year I chose "resident, but non-domicile" option when submitting Form-12 for year 2018 for myself and spouse and revenue did not question it. I usually submit Form-12 every year (as I have usually some dividend and employer share option income) and in the past I chose Irish domicile primarily because I was not aware of what it meant. I intend to declare "resident, but non-domiciled" for year 2019 too.

I will appreciate any comments or opinions.

The confusion arises as domicile is not defined so you have to revert to case law. From what you have described it would look that you aren't domiciled in Ireland. Revenue could however argue that you acquired the Irish domicile.

Are you looking to acquire these assets from funds accumulated while you were in Ireland? If so Im not sure if this would work due to the transfer of assets abroad rules. I think there is anti avoidance for Non Doms which will deem the income as Case IV and therefore not subject to the remmitannce basis of taxation.

taxmatter said:

It is not clear to me if acquiring Irish citizenship or owning PPR here changes our domicile if we don't intend to reside here permanently.

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Acquiring Irish citizenship or a PPR here does not in itself change your domicile.

Since you do not intend to remain in Ireland permanently and intend to return to your home country, it would not be accepted that you have changed your domicile of origin.

The remittance basis would apply.

This Guide may assist you.

My brother in law is in a similar situation as the OP. He's italian national and despite he's married with a Irish citizen (my sister) he's not Irish domiciled. He seeked professional advice on the remittance basis and I was with him when we met the tax advisors. The meeting covered a lot of aspects but this is a brief summary

1) It's quite difficult to obtain an irish domicile. He would have to severe all ties with his original country, sell the apartment that he still owns, close the bank account in Italy and prove that he has no ties anymore with Italy, he declares that he never wants to return on a permanent basis to Italy, otherwise he would still be deemed italian domiciled even if he had a Irish passport (he only has an Italian passport by the way).

2) Needs to avoid transferring foreign assets to his wife's name (since she's Irish domiciled and Irish tax resident) and some transfers would be seen as a tax avoidance move so that the wife could benefit. This doesn't apply to the OP since the wife is not Irish domiciled

3) Don't remit any foreign money into Ireland not only by bank transfer via bank but also avoid using the credit card linked to his Italian account in Ireland while he's tax resident in Ireland for large purchases.

4) Not all investment vehicles can avail of the remittance basis, but since he only has shares and U.S. domiciled ETF with a U.S. broker (he lived in the U.S. before moving to Ireland) they do fall into the remittance basis scheme

5) What Fergal19 refers to:

"Are you looking to acquire these assets from funds accumulated while you were in Ireland? If so Im not sure if this would work due to the transfer of assets abroad rules. I think there is anti avoidance for Non Doms which will deem the income as Case IV and therefore not subject to the remmitannce basis of taxation"

was also clarified for my brother in law and only applies to specific situations: for example if he holds 100 shares of Kerry Gold with AIB, he sells the shares and makes 10.000€ capital gain , pays the tax due in Ireland on the 10.000€ then he can do whatever he wants with the rest of the money gained as it's clean money, taxes have been paid: if he transfers the money abroad and reinvests it and makes further profits from that money then it doesn't matter, he can avail of the remittance basis all the time.
If he owns 100 shares of Kerry Gold with AIB, transfers those shares into an account in Dubai today, sells the shares tomorrow and makes 10.000€ to avoid paying the irish capital gain tax then this is not seen as "foreign income" it may be seen as a move to avoid paying taxes in Ireland. This is what Fergal19 refers to.

Seamus

Many thanks all, and especially Seamus for taking the time to respond in such detail. This is exactly the kind of information I was looking for.

And just to add some more details to my original post, even though funds have been accumulated in Ireland, they are from employment income in Ireland and hence after tax. Any income resulting from investment abroad will not be used to cover any expenses or pay off any loans and is likely to just accumulate in foreign bank (or broker) account. And it is likely to be relatively small (tenth or less of our current employment income in Ireland which is sufficient to cover our expenses many times over).

On the basis of all this I believe Remittance basis would apply but I am open to any other thoughts.

It’s an open and shut case; the Remittance Basis will apply.

Thanks, @seamus1968 for sharing that information from the meeting with the tax advisor!