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Ireland: Offshore Legal and Tax Regimes

Taxation of Foreign and Non-Resident Employees

In Ireland, the taxation of individuals is based on a mixture of the concepts of residence and domicile. See Domestic Personal Taxation for the general principles of individual taxation in Ireland, which also apply to the resident and domiciled employees of non-resident entities.

As in many countries, residence is consequent on presence in Ireland for more than half of a tax year, or a substantial cumulative total of days from previous years. An individual's domicile is in the country where he maintains his permanent home, in the country where he regards himself as belonging. Domicile in Ireland is acquired from an Irish-domiciled father, but can be changed to another country by establishing a life there. Resident foreign employees will thus not normally be domiciled in Ireland.

An individual resident and domiciled in Ireland pays tax on his world-wide income; an individual resident but not domiciled pays tax on his foreign income only if it is remitted to Ireland. A non-resident individual pays income tax only on Irish-sourced income, and is liable to capital gains tax only on gains arising in Ireland or remitted to Ireland, unless he is domiciled in Ireland in which case he is liable on all capital gains.

From 1st January 2012, non-resident individuals pay an 'exit tax' of 33% (30% before 2012) on gains on encashment or maturity of Irish-resident investment fund holdings - before 2001 there was an annual basis for tax of 20% on gains.

In his budget speech in December 2009, Finance Minister Brian Lenihan announced that the government would introduce an ‘Irish domicile levy’ of EUR200,000 on Irish nationals and domiciled individuals whose worldwide income exceeds EUR1m and whose Irish-located capital is greater than EUR5m, regardless of where they are tax resident.



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