Resident but not ordinarily resident nor Irish domiciled

K

Knorp

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Hi,

I arrived in Ireland a few months ago and I would be considered resident, but not ordinarily resident not Irish domiciled for tax purposes in 2006. I have bank accounts in my country where I receive interest for the money that I have there. I have read about the remittance concept and the different combinations of residence, ordinary residence and domicile, but anyway it's not clear to me how it works. Does someone know for sure if I have to declare and pay tax in Ireland for this interest received abroad (taking into account that I'm not ordinarily resident nor domiciled?

Thank you in advance!!!

 
If you are not ordinarily resident and you do not remit the interest into ireland then you are not liable for tax.

If you intend to remain for some time and think at some stage you might need to remit money from an overseas account into Ireland then make sure the paper trail clearly shows that you are remitting capital rather than interest. This can be done by having your interest paid into a separate account. If your interest is paid into the same account and you remit any money from that account during a year that interest has been added, the revenue will deem the money remitted to be interest first and not capital. the difference being that capital transfers are not taxable but interest is income and is taxed on a remittance basis.
 
HighFlier said:
If you are not ordinarily resident and you do not remit the interest into ireland then you are not liable for tax.

If you intend to remain for some time and think at some stage you might need to remit money from an overseas account into Ireland then make sure the paper trail clearly shows that you are remitting capital rather than interest. This can be done by having your interest paid into a separate account. If your interest is paid into the same account and you remit any money from that account during a year that interest has been added, the revenue will deem the money remitted to be interest first and not capital. the difference being that capital transfers are not taxable but interest is income and is taxed on a remittance basis.
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Thank you for your answer, HighFlier. The thing is that the interest that I receive is paid in the same account where I have the capital, so there's nothing I can do about it. But let's say that I have a foreign credit card which funds come from this foreign account where I receive interest and that I use this credit card to pay here in Ireland. Is this considered an income remittance?

Thank you again.
 
Simple answer ...yes. Hard to trace and they probably would have very little interest in doing so but to be fully clean you should not do it.You are using the income to fund your life in Ireland.

If you open a second account in the same institution then normally most banks will pay the interest into that account if you explain why. I hasten to add this is totally legitimate and not evasion it is merely claryfing the source of funds.

Alternatively manually transfer the interest yourself. Maybe go for a yearly or half yearly interest accumulation rather than monthly.
 
Hi again,

I suspected that. Anyway, I must tell you that my savings abroad (and therefore the interest paid) are relatively modest. I have another question: you mentioned that if there's no clear separation then 'the revenue will deem the money remitted to be interest first and not capital'. To clarify it: you don't mean that they will consider that all the money that I transfer is income and not capital, right? :eek: I mean, I would have to pay tax only in the interest (or so considered) transferred, not on the total amount (capital + interest), right?

Thanks.
 
As a matter of curiosity:
1. Would Knorp have to settle his 2006 tax affairs in October 2006 or 2007?
2. Assuming Knorp is not employed otherwise and considering that he would have an income from investment, would he have to pay PRSI contributions class s in December 2006?
 
Knorp,

Yes only the interest earned would be taxable not the whole amount.

In relation to Alba's question it depends on whether you are paye or not if you are paye then I would say declaration of minor interest for 2006 could be made in a tax return before Oct 2007.
 
This interests me because I am in the same position as Knorp and struggling to make sense of the Irish tax system. I am retired and I have no Irish income and the remittance basis applies to my non-uk income. My plan is to remit capital from my segregated capital account, but not interest / dividends. So what is the position about PRSI? Does it just apply to remitted+UK income, or is it levied on unremitted income as well?

Thanks for any info you can give.
 
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