Key Post What options are there for people to reduce their tax these days?

Brendan Burgess

Brendan Burgess

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For someone who does not have any legacy tax reliefs who has a high income, what can they do to reduce their tax bill.

Take a really high paye earner on €300k a year.


Maximum pension contribution: €46,000 (40% of €115,000)

€30k if he invests the €150k max in an Employment and Incentive Scheme
€32k if he pays €80k for his mother's nursing home fees
€21k if he invests the maximum €50k in a film.
€1k if he pays €7,000 in tuition fees
€4,100 if he pays €10,000 in permanent health insurance premiums

What else is there?

He can donate to charity, but the charity gets the benefit.


Brendan
 
Deed of Covenant to parent over 65: (41-20) = 21% and possible 20% refund for recipient.
Subject to 5% restriction of total income after charges.
 
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Seek non resident status
If they leave PAYE employment and start their own business then there is potential recoupment of tax paid
Based on the pension % you give they must be aged 60+ so possibly retirement and starting their own business may be an attractive option, depending on their "verve"
 
Buy an investment property before the end of the year and avail of the CGT exemption if you don't sell the property for 7 years.
 
As far as I can see, non-residency is the only option to actually save significant amounts of tax - the others listed above are not really tax savings - there are costs/risks attached to each of them. There seems to be a perception that 'the rich' avoid paying tax but there really aren't any legal ways to do this that don't involve buying/paying for something and/or investing in something that you might not otherwise invest in. I've looked long and hard at this and non-residency is pretty much the only way to legally avoid large amounts of tax. For those willing to take that step, it is fortunate that our revenue commissioners take a more benign view of becoming non-resident than, e.g. the UK or the U.S.
 
Orga said:
Seek non resident status....
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As I understand it, that means living abroad for 183 days a year or thereabouts, so where do you go & what does it cost to sort accomodation there (assuming you may have a near debt free home in Ireland) ?
 
CiaranT said:
Has anyone invested in an Employment and Incentive Scheme? Are there low risk ways to invest? Thanks.
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Hi Ciarán

I hadn't heard of any such scheme until I met someone today who claimed to have raised €650k for a software startup.

Brendan
 
MrEarl said:
As I understand it, that means living abroad for 183 days a year or thereabouts, so where do you go & what does it cost to sort accomodation there (assuming you may have a near debt free home in Ireland) ?
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And that is why it is completely unrealistic for almost everyone, even someone earning €300k a year.








I like Monaco...;)
 
MrEarl said:
As I understand it, that means living abroad for 183 days a year or thereabouts, so where do you go & what does it cost to sort accomodation there (assuming you may have a near debt free home in Ireland) ?
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You would need to be abroad c. 246 days a year on average (you can't have more than 279 days in Ireland in the previous 2 years).
SBarrett said:
And that is why it is completely unrealistic for almost everyone, even someone earning €300k a year.
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Why would it be completely unrealistic? It would be very viable for someone on 300K if they could work anywhere (becoming less uncommon with telecommuting) or had a business that was international/could be run from anywhere. They would go from c. 12K per month take-home to 25K take home if they can go somewhere with no tax – a bit less if it is ‘only’ to somewhere with low tax not no tax. An extra 13K a month (156K per annum) will easily fund a rental property pretty much anywhere plus flight and other costs with plenty left over to make the whole thing worthwhile. Throw in a nice employer willing to hand over the employers PRSI saved (c. 32K per year) and it’s very realistic and viable.
In my daughter’s year, I know of at least three parents who have become non-resident in the past year or so. Families (late teens/college age) and family home still here but parent’s work and tax affairs relocated.
 
orka said:
You would need to be abroad c. 246 days a year on average (you can't have more than 279 days in Ireland in the previous 2 years).Why would it be completely unrealistic?....
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So,

Where do you go, assuming you want a low to no tax rate, preferably somewhere thats reasonably easy to commute back to Ireland from time to time, ideally English speaking, decent weather and not overly expensive cost of living (not to mention suitable to work from, be it via internet and telephone or for meeting people etc) ?

I suspect Monaco may be an expensive place to live in, be it property rent / ownership, social life etc by the way, Mr. Barrett :D
 
orka said:
Why would it be completely unrealistic?
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Not many PAYE workers can work remotely that often. They are going to be high up in the organisation and will most probably be needed on the ground more often than not. There will of course be the exception.

I would suspect most who do go non-res are business owners who have a strong management team in place so they can afford not to be there for half the year.


Steven
www.bluewaterfp.ie
 
What are the options for non-PAYE earners to avoid taxes like DIRT and CGT? For instance, can you avoid DIRT by being non-resident?
What about CGT -- can you avoid it just by being non-resident in the year a large gain is realised?
 
MrEarl said:
Where do you go, assuming you want a low to no tax rate, preferably somewhere thats reasonably easy to commute back to Ireland from time to time, ideally English speaking, decent weather and not overly expensive cost of living (not to mention suitable to work from, be it via internet and telephone or for meeting people etc) ?
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Monaco, Andorra, Gibraltar, Switzerland, Isle of Man, Channel Islands, Dubai, Bahamas, Cayman Islands...
SBarrett said:
Not many PAYE workers can work remotely that often. They are going to be high up in the organisation and will most probably be needed on the ground more often than not. There will of course be the exception.
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It's certainly more weighted towards own-business people at the moment but there are increasing numbers of well-paid PAYE workers who can work anywhere. Many go the contractor/own one-man company route but I think that's being clamped down on a bit. Of my very small sample of 3 that I know of, two have their own businesses that were already quite international and one is (was) PAYE, previously working remotely anyway.
But given that it is a very big step and not for everyone, I guess we're back to the whole point of this thread - there are very few easy/costfree/riskfree ways to reduce your tax bills - contrary to the populist view that 'the rich' can avoid tax easily.
 
dub_nerd said:
What about CGT -- can you avoid it just by being non-resident in the year a large gain is realised?
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I'm pretty sure you have to be 'not ordinarily resident' to avoid CGT, not just non-resident. You don't become not OR until you've been non-resident for three years.
 
orka said:
I guess we're back to the whole point of this thread - there are very few easy/costfree/riskfree ways to reduce your tax bills - contrary to the populist view that 'the rich' can avoid tax easily.
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I can still hear Burton's screechy voice telling us how the rich don't pay tax. From all the high earning clients I have worked with over the years, they have paid their fair share of tax. Most used pension funding to reduce their tax but that has being seriously curtailed over the last number of years.

Steven
www.bluewaterfp.ie
 
Monaco, Andorra, Gibraltar, Switzerland, Isle of Man, Channel Islands, Dubai, Bahamas, Cayman Island . In recent years these countries have become more compliant with the EUSD and Ireland has tax treaties with some. You might find a dodgey bank willing to setup an account. The countries still outside any tax arrangement that I know is UAE and the Philippines english spoken and cheap to live there.
 
John Walsh said:
Monaco, Andorra, Gibraltar, Switzerland, Isle of Man, Channel Islands, Dubai, Bahamas, Cayman Island . In recent years these countries have become more compliant with the EUSD and Ireland has tax treaties with some. You might find a dodgey bank willing to setup an account.
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What's wrong with a person's residence country being compliant and/or having tax treaties and what would you need a dodgy bank for? There's nothing wrong with taking up residence in a new country and falling under that country's tax regime rather than Ireland's. You seem to be assuming that this thread is how to evade tax which isn't the case.
 
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