TAX EXILES:CHANGES TO the tax residency rules that would add new qualification criteria, including whether the person had a permanent home here, have been recommended by the commission.
The commission chairman, Frank Daly, said the tests could include consideration of such matters as whether the person concerned had children who went to school here, or had his or her centre of social activity here.
As matters stand, people can qualify for non-residency for tax purposes if they spend fewer than 183 days here in a single tax year.
This contrasts with most other EU states, where additional tests also apply.
The prescribed number of days rule is one that can be “managed” by taxpayers, according to the report. “It enables a person who has a home in Ireland and significant business interests here, to avoid exposure to Irish tax . . . This is inequitable, particularly in the case of individuals who are citizens . . . We are of the view that this damages the integrity of the tax system.”
The commission recommends that the criteria be supplemented by additional qualifications “which should include a permanent home test and a test based on an individual’s centre of vital interests”.
At a press briefing yesterday, Mr Daly said vital interests could involve personal and business matters. He said the tests being suggested were implemented rigorously in other jurisidictions and “we believe they are capable of being implemented”. “Vital interests” could include family, social and business interests.
The commission has also recommended the abolition of a rule that allows a person who makes a gift of property to the State to discount up to 182 days spent in the State each year for the purposes of determining tax residency, if that time is spent here “advising on the management of the gifted property”.