Residency Question

Hi all, Great site...been a lurker here for a while and was hoping someone could just provide clarification of my interpretation of the tax residency rules. Just for a reminder!

Your residence status for tax purposes is determined by the number of days that you are present in Ireland in a tax year. You will be resident in Ireland for a tax year in either of the following circumstances: * If you spend 183 days or more in Ireland during a tax year or, * If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year. For example, if you spend 140 days here in Year 1 and 150 days here in Year 2, you will be resident in Ireland for Year 2.

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My question is: Is it necessary to spend less than 183 days in Ireland for each tax year over a two year period or for example would say 190 days in year one and 90 days (280-190) in Year 2 still qualify you for non resident status? I'm presuming that this would be acceptable? Am I wrong? Thanks in advance!

Yes you ahve to spend less than 183 days in a year - otherwise you are Irish resident.

If you spend 190 days in year 1 you are resident in year 1
If you spend 90 days in year 2 you are resident in year 2 as you have spent 280 days in the 2 years.

However, if you spend 190 days in year 1 you are resident in year 1
If you spend 189 days in year 2 you are non-resident in year 2.

Domo,

However, if you spend 190 days in year 1 you are resident in year 1
If you spend 189 days in year 2 you are non-resident in year 2.

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should that be 89 days in year 2?

Oops, yes, that was a typo

Thanks guys. That's what I was thinking. Just wanted to make sure it wasn't necessary to spend less than 183 days in ireland each year on top of the 280 over two years. I'm looking towards my tax status for 2010 and how long I'd have to be away to be considered non resident for 2010. Cheers!

Can anybody help with this?

If you have worked abroad over the past two years 2008 & 2009.

You are resident in year 1
Nonresident in year 2.

The country where you have been working does not have a double taxation agreement with Ireland.

You have paid tax to the host country for year 2 (aswell as PAYE tax in ireland).

Is it possible to claim any or all tax back from Ireland for year 2?

What should ideally of happened if you were being assigned abroad by your employer in such circumstances that you would break Irish residency is that a PAYE exclusion order should have abeen applied for so that Irish PAYE would not have been deducted from the date you left the country. Normally an employer will organise this for assignees going abroad.

Under Irish domestic law (you don't have to rely on a Double Taxation Treaty) if you are leaving Ireland with the intention and in such circumstances that you will be non resident for the following year then split year relief can be claimed so that only employment income up to the date of your departure is taxable in Ireland. On this basis a PAYE exclusion order can be applied for so that Irish tax is not deducted.

It should be possible to file tax returns and claim a refund of Irish tax (assuming you did in fact break Irish residency). If you did have Irish workdays during your period abroad, this could complicate matters depending on the number of such days

Hi Breninio
Thanks for your reply.
The reason I didnt consider applying for this PAYE exclusion order was because when I went abroad initially it was for a short contract, but I ended up extending my stay each time my new contract was up. In the end i stayed about 18 months or so.

Regarding breaking irish residency for this period and claiming my Irish tax back, do you know what the negatives are in doing this.... eg pension stamps etc ?
In the long run is it worth doing it?

I appreciate your inputs.

Your pension payments were paid through Prsi deductions, and remain on your record, not affected by tax refund. No negatives to reclaiming Irish tax and you've paid tax in your country of residence, so all clear.