GUIDE TO COMING TO WORK IN IRELAND
For contractors or individuals coming to work in Ireland
1. Residency rules explained
2. How do residence, ordinary residence and domicile affect my tax treatment in Ireland
3. Credits and Reliefs available
4. Obtaining a Personal Public Service number (PPS number)
& Social Security
1. Residency rules explained
Your residence status for Irish tax purposes is determined by the number of days you are present in Ireland during a given tax year.You will be regarded as present in the State for any day if you are present therein at any time during the day.
You will be resident in Ireland if you are present in the State for:
(a) 183 days in Ireland for any purpose in the tax year in question OR
(b) 280 days or more for any purpose over a period of two consecutive tax years - you will be regarded as resident in Ireland for the second tax year (periods of presence that do not exceed 30 days are disregarded).
Option to Elect to be tax resident in the State
If you would not be tax resident in the year of arrival under the normal tests, you may elect to be tax resident for the year of arrival (it is unusual to make this election and certain conditions apply).
It is recommended that you keep a detailed travel log recording all days in and out of Ireland (including travel tickets and/or other proof of travel).
You will become ordinarily resident in the State for a tax year if you have been resident in the State for the previous three consecutive tax years. You will become ordinarily resident for the fourth year regardless of whether or not you are actually resident in the fourth year.
You will cease to be ordinarily resident once you have three consecutive years of non-residence. You will become not ordinarily resident from the fourth year.
Under Irish law every individual is regarded as acquiring a domicile of origin on his birth – this is the domicile of his father (unless either his father had died before his birth or he was in illegitimate child – in which case he takes the domicile of his mother).
Your domicile may change either by your father acquiring a domicile of choice while you are still a minor or by you acquiring a domicile of choice when you come of age.
The concept of domicile is a much more permanent one that that of your residence. Its primary relevance to income tax is in relation to the tax treatment of certain foreign source income of an individual who is resident but not domiciled in the State.
2. How do residence, ordinary residence and domicile affect my tax treatment in Ireland
Resident, ordinarily resident and Irish domiciled:
Taxable on all Irish and foreign sourced income in full, with possible tax credit for foreign tax paid on foreign source income assessable here.
Not resident, ordinarily resident and Irish domiciled:
Taxable on all Irish and foreign sourced income in full. However income from the following sources is exempt from tax:
- Income from a trade, profession, office or employment, all the duties of which are exercised outside Ireland; and
-Other foreign income, e.g. investment income, provided that it does not exceed €3,810 in the tax year in which it is earned.
Not resident, ordinarily resident and not Irish domiciled:
Taxable on Irish sourced income in full and taxable on remittances of foreign sourced income.
However income for the following sources is exempt from tax:
-income from a trade, profession, office or employment, all the duties of which are exercised outside Ireland; and
-Other foreign income, e.g. investment income, provided that it does not exceed €3,810 in the tax year in which it is earned.
Resident and ordinarily resident but not Irish domiciled:
Taxable on Irish sourced income in full and taxable on remittances of foreign sourced income.
Resident and domiciled but not ordinarily resident:
Taxable on Irish sourced income in full and taxable on remittances of foreign sourced income.
Not resident, not ordinarily resident and not Irish domiciled:
Taxable on Irish sourced income in full and taxable on foreign sourced income in respect of a trade, professional or employment exercised in Ireland.
Note 1. While the above table outlines your income tax treatment under Irish domestic legislation, you should be aware that the provisions of a double taxation agreement will generally take precedence over domestic legislative provisions and may result in a different tax treatment in certain circumstances
3. CREDITS AND RELIEF’S AVAILABLE
If tax is charged in a country with which Ireland has a double taxation agreement you will be given relief as specified in the relevant DT agreement.
This is normally provided by either exempting the income from tax in one of the countries or by crediting the foreign tax paid against your Irish tax liability on the same income.
Personal Tax Credit:
The single person’s tax credit is €1,650; the married couple’s tax credit is €3,300
Employee Tax Credit:
The employee tax credit (PAYE credit) is €1,650. From year 2017, the tax credit for self employed business owners and proprietary directors (director’s owning 15% or more of the voting shares in his/her company) will be €950 per year.
What is a tax year?
The tax system in Ireland operates on a calendar year basis, so a tax year runs from 1st January to following 31st December
Taxation of Married Couples
One spouse resident
Where only one spouse is resident in the State, that spouse is treated for tax purposes as if unmarried. However, where Revenue are satisfied that the non-resident spouse has no income, the couple may be taxed as a married couple (this will afford them higher personal tax credits and higher standard rate tax band.
Both spouses resident
Where both spouses are resident here for tax purposes, the couple may elect to be taxed as single individuals or they may be assessed jointly (where one spouse is assessable on the income of both spouses).
Split year residence
Split year residence can in certain circumstances exempt from taxation in Ireland employment income earned prior to arrival in Ireland and employment income earned following departure from Ireland.
SARP & Foreign Earnings Deduction
SARP (Special Assignee Relief Programme) is an income tax relief designed to attract senior executives and technical experts from overseas to work in Ireland. The relief provides an exemption from income tax on up to 30% of the employees taxable earnings in Ireland. High earning employees of foreign multinationals may benefit from this and so attract inward investment by such companies.
FED – Foreign Earnings Deduction
FED is an income tax exemption on a portion of income earned from working abroad. The relief is designed to encourage the development of Irish trading operations and to develop business in markets for Irish exporters. In the BRIC countries (Brazil, Russia, India and China) or South Africa, Egypt, Algeria, Senegal, Tanzania, Kenya, Nigeria, Ghana or the Democratic Republic of the Congo, Japan, Singapore, the Republic of Korea, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico and Malaysia.
4. Obtaining a Personal Public Service Number (PPS)
The identification number for individuals for many State services in Ireland is known as the Personal Public Service number (PPS Number). The Department of Social and Family Affairs (DSFA) allocates PPS number to individuals. You will be asked to produce documentary evidence of identity and residence in this country. The complete list of documents required can be found on the DSFA website at http://www.welfare.ie
Once you have your PPS number you can apply to the Revenue Commissioners for a determination of your tax credits and tax rate bands that will apply to your earnings that are within the scope of PAYE.
