Resident in Ireland, non-Irish citizen: domicile?

C

cuy

Registered User
Messages
11
Hi,

I would greatly appreciate your guidance in determining whether my domicile of origin still holds or whether I would be deemed to have acquired Irish domicile.

Here are my personal details that I understand might be relevant to make a determination on my domicile status:
  • I was born and raised in Italy by my parents, both Italian citizens
  • I moved to Ireland about 15 years ago. I've been resident in Ireland since then.
  • I've worked as a PAYE employee in Ireland for about 15 years
  • I bought an apartment with my wife-to-be (at the very peak of the property bubble, but I digress...)
  • I married my wife (an Irish citizen) ten years ago
  • We have two children
  • I've filed tax returns and paid capital gains tax according to the rules for an Irish-domiciled Irish resident person since I moved here (i.e. I've always paid CGT on all my gains, whether they were remitted to Ireland or not)
  • I'm in the process of purchasing a new house in Ireland and plan to sell/rent out the apartment after the transaction is complete
  • I regularly visit family (parents, siblings, relatives) and friends in Italy during the holidays
  • I do not intend to apply for Irish citizenship.

I recently found out about the existence of the remittance basis of taxation for non-Irish domiciled, Irish-resident persons.

A few years ago, I opened a bank account with KeytradeBank, a Belgian bank, in a bid to avoid the high fees charged by Irish banks (as I recall, I found out about KeytradeBank from a thread here on AskAboutMoney).

I currently hold investments in a basket of individual shares (mostly US stocks, some UK stocks) in my KeytradeBank trading account.

If I sold them today, I would lock in a significant gain.

The advantage of retaining my Italian domicile of origin would be that I can avail of the remittance basis of taxation for the capital gains realized in my share holdings in my Belgian KeytradeBank account.

My questions:
  • Can I consider myself domiciled in Italy?
  • Or have I somehow acquired Irish domicile?
  • Can I decide what my domicile is?

Thanks,
- cuy
 
You have still retained your Italian domicile unless you have made efforts to dispose of it. Buying a home in Ireland is not enough to dispose of this, although it may be challenged and you would need a competent tax advisor to assist then.

And of course there are things you could do to 'demonstrate' or reinforce your domicile e.g. the classic example is to buy a grave-plot in Italy or a cheaper option, in your Will express a wish to be buried in your childhood town etc.
 
A person acquires domicile in the country of their birth.

You can declare your domicile to still be in Italy, Revenue may decide to challenge that.

The intention to be buried in the country of your birth is the common marker that you have not relinquished your domicile there.
 
cremeegg said:
The intention to be buried in the country of your birth is the common marker that you have not relinquished your domicile there.
Click to expand...

That's gruesome, the OP would be better off buying a small vegetable patch and if challenged by revenue he can counter act saying that when he retires he wants to return to Italy to look after his beloved property which he owns back home. It would probably be much cheaper than buying a burial grave. If he OP has a Italian passport, a plot of land in Italy, he frequently visits Italy and declares that he wants to retire in Italy then Revenue will have very little ground for challenging.

Franc
 
Domicile is a quirky bit of the tax canon. I think everyone is ignoring a very salient fact here, which is that one changes their domicile of origin by acquiring a domicile of choice, which case law indicates is to be gleaned by analysis of all relevant facts.

Filing multiple legal declarations (tax returns) over a long period asserting your domicile to be Irish, is likely to be quite persuasive prima facie evidence of the OP's intent & choice, in the absence of stronger contradictory evidence.

OP if the amount involved is substantial, you would be well advised to go and consult with a tax adviser who specialises in this area, before you go ahead, as the cost of getting it wrong could be hefty. You'll pay for what you get though, ie thousands not hundreds, particularly since the only way to gain certainty is engagement with Revenue, which will require submissions that are detailed and lengthy.
 
cremeegg said:
A person acquires domicile in the country of their birth.

You can declare your domicile to still be in Italy, Revenue may decide to challenge that.

The intention to be buried in the country of your birth is the common marker that you have not relinquished your domicile there.
Click to expand...

It's the common marker, if they haven't been filing an annual declaration (and paying tax) indicating the contrary, for a long time!
 
First thing
  • The OP needs to be tax resident in Ireland only, and not tax resident both in Italy and Ireland. In order to do so he needs to be registered with the Italian embassy in Dublin. Failure to do so will deem the OP as tax resident both in Italy and Ireland, there is no escape: even if the OP has not been in Italy for many years but still he’s not registered with the Italian embassy he’s both tax resident in Italy and in Ireland even if he lives in Ireland 365 days a year. This is a consolidated fact in the Italian tax system. Differently than Ireland, for the Italian system (but also Spanish and French systems) you are either registered with a city council in Italy or an embassy abroad, it cannot be otherwise. Being registered with a Italian embassy abroad is one of the elements that make you non-tax resident in Italy. Other elements: it must be true that he lives abroad, not a fake residency. Valentino Rossi paid millions in taxes for being registered with the Italian embassy in the U.K. to avail of the non-domiciled status while living in Italy and particularly having his main economic and family interests in Italy. So was Pavarotti and many other VIPs.
There are two rules in the Italian tax system
  • If the individual is registered with an embassy in a listed tax haven (Ireland is not in the list) then if questioned it is down to the individual to prove that he indeed lives in that country and has his main economic and family interests in that country. In this scenario the statutory limit that the tax system has to chase an individual is 12 years.
  • If the individual is registered with a an embassy in the “white list” countries (Ireland is as all the EU countries, USA, Australia etc. etc.) then it’s down to the Italian tax system to prove that the individual is not really living abroad but he’s faking his status to avoid paying taxes in Italy and this is why he’s registered with an embassy abroad. In this scenario the statutory term that the tax system has to chase an individual is 6 years. The tax system is barred from going back more than 6 years.
So if the OP as from his post seem to tell, is registered with the Italian emabssy in Dublin has wife and children living in Dublin and attending a school in Ireland and not in Italy (for example) then he’s definitely not tax resident in Italy full stop. He pais in Italy only the tax from gains that he has from investments in Italy (DTA agreements) and any balance on the money that he remits to Ireland, (inheritances is different if he lived in Ireland over 5 years), if non-domiciled in Ireland. He doesn't have to pay or declare in Italy any taxes on any income that he has outside of Italy

If he has properties in Italy (like a house, other real estate etc) he’s clearly non-irish domiciled and needs to pays no tax in Ireland from his USA income, neither he has to declare it. If he returns to Italy or moves anywhere else and transfers his US profits wherever he moves to, they will be tax free. Especially for PAYEEs very few other countries have such great benefits for non-domiciled as Ireland. I'm unlucky that I'm Irish domiciled.

Seamus.
 
Last edited:
Thank you everyone for your replies.

torblednam said:
Filing multiple legal declarations (tax returns) over a long period asserting your domicile to be Irish, is likely to be quite persuasive prima facie evidence of the OP's intent & choice, in the absence of stronger contradictory evidence.
Click to expand...

I reviewed the Form 11 returns I filed.

My earliest Form 11 return was filed in 2013 (prior to that date, I returned my CGT using form CG1).

I note that Form 11 for the years between 2013 and 2017 had a Remittances section in Panel A - Personal Details with a tickbox stating "If you are resident but not domiciled in Ireland, tick the box": I did not tick that checkbox.

Form 11 for the years 2018 and onwards require you to "indicate if you are Domiciled in Ireland or Not domiciled in Ireland", and the ROS offline form will not let you proceed until you have selected one of the other option: I ticked the "Domiciled in Ireland" option.

Given the facts above, it appears that I incorrectly completed my Form 11 returns for years 2013 onwards, as far as my domicile status goes. I should have ticked the "Not domiciled in Ireland" option.

torblednam said:
OP if the amount involved is substantial, you would be well advised to go and consult with a tax adviser who specialises in this area, before you go ahead, as the cost of getting it wrong could be hefty.
Click to expand...

I understand that consulting with a tax adviser is advisable.

In relation to the cost of getting it wrong, am I correct to think that, because I calculated and paid my capital gains tax liabilities according to the "arising basis" of taxation rather than the "remittance basis" of taxation, I have effectively pre-paid (or possibly overpaid) all the capital gain tax that would have become due when remitted into Ireland?

As far I understand (and I realize that I need to further educate myself on the advantages of the "remittance basis" of taxation versus the standard "arising basis" of taxation), the main advantages of the "remittance basis" of taxation are that:
  • it postpones when tax becomes due: instead of tax being due when the chargeable gain arises, it is due when the gain is remitted into Ireland
  • it prevents tax from becoming due if the gain is not remitted (whereas, in the "arising basis" of taxation, the tax is due in the same tax year when it arises, whether the gain is remitted into Ireland or not)

So the net effect to me, given that I have calculated and paid my capital gains tax according to the "arising basis of taxation" so far, would be that I have either:
  • prepaid all the capital gain tax that would become due (assuming I would remit all my gains to Ireland in the future)
  • overpaid my capital gain tax (in the event that I would not remit some of my gains to Ireland in the future)
In other words, if I decided to proceed with asserting that my domicile of origin still applies and availing of the "remittance basis" of taxation, then I would find myself in a position where I could obtain a tax refund on overpaid CGT or minimize future CGT exposure.

Is this correct?
 
[Post deleted. Misleading and unfair-in-tone comment to seamus1968. Apologies to seamus1968]
 
Last edited:
Ticking the Non-Dom box on the return or not ticking it as the case may be isn’t the end of the world. The facts are the facts; someone is either likely to be Non-Dom due to the fact pattern or not and ticking a box incorrectly does not preclude that.
 
Setanta12 said:
I didn't read any further ... nonsense.
Click to expand...

Setanta why is it nonsense ? I was just highlighting the fact that if the OP is tax resident both in Ireland and Italy, he will probably have minimal or no real benefits in availing of a non-dom status in Ireland. Italy will tax the OP on his worlwide income. Probably I didn't explain well ?

Facts that can make the OP tax resident both in Ireland and Italy at the same time

a) Lives in Ireland more than 6 months/year
b) Is not registered with the italian embassy in Ireland

Seamus
 
Last edited:
Gordon Gekko said:
Ticking the Non-Dom box on the return or not ticking it as the case may be isn’t the end of the world. The facts are the facts; someone is either likely to be Non-Dom due to the fact pattern or not and ticking a box incorrectly does not preclude that.
Click to expand...

Explicitly stating that you are Irish domiciled on a legal document, when a criterion for changing domicile is "choice", is a pretty prominent fact though, wouldn't you think?
 
torblednam said:
Explicitly stating that you are Irish domiciled on a legal document, when a criterion for changing domicile is "choice", is a pretty prominent fact though, wouldn't you think?
Click to expand...

Not at all. I appreciate your professional background, but there are plenty of people who don’t realise that they are non-Irish domiciled.

If the background facts support someone’s non-domicile status, a tick on a form (or lack thereof) isn’t really relevant.

It’s all case law driven obviously given that domicile is not defined in legislation and I’ve yet to see a case where an otherwise non-domiciled person becomes deemed Irish domiciled because they couldn’t navigate a Form 11.
 
Thank you for your comments, Seamus.

I believe you are referring to the requirement for Italian citizens residing abroad to register with the 'Anagrafe degli Italiani Residenti all’Estero’ A.I.R.E.

I registered with A.I.R.E. shortly after moving to Ireland.

I did further reading on the requirements that Italian citizens need to meet to satisfy the Italian revenue that they are non-resident in Italy. The material available on the Italian Revenue Agency website indeed states that being registered with A.I.R.E. is one of the conditions to be deemed resident in Ireland by Italian revenue.
 
Gordon Gekko said:
If the background facts support someone’s non-domicile status, a tick on a form (or lack thereof) isn’t really relevant.
Click to expand...

The if in that sentence is the significant thing though, isn't it. We're not dealing with somebody who has presented us with sufficient facts to say that they're clearly not Irish domiciled.

The OP hasn't given us a huge amount to go on, other than that he has been here for much of his adult life, has a career here, an Irish wife and family, owns Irish property.

No reference to OP retaining commercial, business or other interests in Italy. Occasionally holidaying / visiting family doesn't mean you haven't shed your domicile of origin in favour of a domicile of choice.

There's reference to a an offshore bank / investment account, which not being in Italy probably doesn't make much difference, other than it certainly doesn't help make a case in favour of Italy.

He has consistently throughout his time in Ireland:
1. paid tax on the basis of being Irish domiciled,
2. positively asserted on his tax returns that he is Irish domiciled in recent years, and
3. prior to that, on his earlier returns he elected not to declare himself non-domiciled.

The 3 numbered points above will certainly be considered very relevant by Revenue, and in the fact pattern, limited as it is at present, they will certainly be relevant.

The Form 11 also contains an explanation of what domicile means, at the relevant panel - one box or the other has to be ticked, and there's a 3-line explanation - so tax professional or otherwise, I don't believe it's as straightforward as just playing dumb to have that declaration discounted.
 
It’s not that the declaration is discounted. It’s just that it’s not necessarily a smoking gun, regardless of what Revenue may wish.

The primary sources for tax principles are legislation and case law; “but you ticked the wrong box on the form!” doesn’t come into it.
 
Gordon Gekko said:
It’s not that the declaration is discounted. It’s just that it’s not necessarily a smoking gun, regardless of what Revenue may wish.

The primary sources for tax principles are legislation and case law; “but you ticked the wrong box on the form!” doesn’t come into it.
Click to expand...

It's not "you ticked the wrong box on the form" though. The OP wants to argue he ticked the wrong box, repeatedly, whereas Revenue are adopting a default position of him having taken due care to complete his returns correctly...

So it's more like, "you made an assertion, having been given a concise explanation of what the question meant, and you consistently did so and behaved accordingly, over a sustained period, and you're only now contradicting all earlier actions and assertions".

I'm a bit surprised that you place so little importance on the declarations people make on their tax returns Gordon! :eek::D
 
The point, torblednam, is that there are plenty of people who are completely unaware of their domicile. With the obvious caveat around the fact that it’s case law driven and therefore somewhat nebulous, someone is either likely to be Irish domiciled or they’re not. Whether they’ve ticked a box or not ticked a box is not particularly relevant. It all comes down to the supporting facts.

If a 66 year old hasn’t ticked the ‘Over 65’ box, it doesn’t change the person’s age (i.e. the facts of the case).

Revenue might like it to be a case of “aw shucks, I never ticked the box so I must be Irish domiciled”, but the legislation doesn’t work like that.
 
Gordon Gekko said:
The point, torblednam, is that there are plenty of people who are completely unaware of their domicile. With the obvious caveat around the fact that it’s case law driven and therefore somewhat nebulous, someone is either likely to be Irish domiciled or they’re not. Whether they’ve ticked a box or not ticked a box is not particularly relevant. It all comes down to the supporting facts.

If a 66 year old hasn’t ticked the ‘Over 65’ box, it doesn’t change the person’s age (i.e. the facts of the case).

Revenue might like it to be a case of “aw shucks, I never ticked the box so I must be Irish domiciled”, but the legislation doesn’t work like that.
Click to expand...

It is indeed nebulous, but my point is that determining a person's Domicile is done by examining a matrix of evidence of intention and actions.

If a person has a binary choice on an official form, where the meaning of that choice is plainly spelled out - what country do you consider you are a permanent resident of (bearing in mind if you're foreign you will have started out with a different one) - their answer to that question has to carry weight, in any analysis of their overall position.

Much moreso than, for example, buying a grave in their homeland a few months before starting a dialogue with Revenue about how my last 15 years' returns have been wrong.

Ironically, a person whose returns are in rag order, routinely containing errors or omissions, would probably be much more credible in such a case, than someone who clearly takes great care to file a correct and complete return.
 
torblednam said:
It is indeed nebulous, but my point is that determining a person's Domicile is done by examining a matrix of evidence of intention and actions.

If a person has a binary choice on an official form, where the meaning of that choice is plainly spelled out - what country do you consider you are a permanent resident of (bearing in mind if you're foreign you will have started out with a different one) - their answer to that question has to carry weight, in any analysis of their overall position.

Much moreso than, for example, buying a grave in their homeland a few months before starting a dialogue with Revenue about how my last 15 years' returns have been wrong.

Ironically, a person whose returns are in rag order, routinely containing errors or omissions, would probably be much more credible in such a case, than someone who clearly takes great care to file a correct and complete return.
Click to expand...

torblednam,

I completely disagree. Even the language is totally misleading. If you brought 100 people in who were born elsewhere and asked them “what country are you a permanent resident of?”, I am strongly of the view that the vast majority would answer “Ireland”.

What’s required, in simple terms, to lose the “adhesive nature” of one’s domicile of origin is a “demonstrable intention” never to return to that jurisdiction. When completing a “domicile questionnaire” for any of the big tax firms, there’s no sign of any reference to any box of a Form 11. There’s merely a cold and objective analysis of the salient facts. The scenario that you’re outlining is completely unrealistic; I have never heard of anyone seeking to assert Irish domicile and then pulling back to the point where they’re refuting a definitive statement on a Form 11. The usual scenario is that 99/100 people haven’t a notion what domicile is or means and they complete their return accordingly and unwittingly. If it turns out that they are in fact non-Irish domiciled based on the salient facts, the box on the Form 11 is in no way a smoking gun.

If it was that easy for Revenue to argue Irish domicile for a foreign person, the corollary is that you or I could flip to foreign domicile easily enough. Very little annoys me more professionally than Revenue’s “heads we win/tails you lose” attitude; they can’t have it every way.

Gordon
 
You must log in or register to reply here.
Back
Top