Will I have to pay tax bringing tools home from abroad?
Ask the Experts: Emigrant construction workers are returning, but are there hidden costs?
Tools of the trade: tax implications on bringing them home from abroad
Q: Laura, New Zealand
My partner and I are returning to Ireland from New Zealand later this year, he is hoping to ship his trade tools home as he has already been offered a job. Many of these tools have been purchased in New Zealand and so we are wondering if he will have to pay tax on them when they arrive in Ireland.
A: Barry Flanagan, senior tax manager at Taxback. com
As with most cases, this really depends on the particular circumstances, but in general, there is a good chance there would be no tax consequences.
Firstly, from an income tax perspective, bringing your own tools into the country does not create a liability. Where there could be an income tax implication is if you had only recently left Ireland, did not break residency, worked abroad and are therefore remained taxable in Ireland on your worldwide income. If so, you could potentially be taxed on NZ income, but relief would be available if you paid any NZ tax.
However, I understand that you have been abroad for some time and that you are not Irish resident.
Where the importation of personal effects may potentially create a tax liability is in the area of customs and import duties. However, in most cases relief will again be available.
Revenue have clear and extensive guidance on their website on this, which can be used for reference, if you look up “Transfer of Residence”.
Revenue state that “Persons transferring their normal residence from outside the European Union (EU) to Ireland may obtain relief from Customs Duty in respect of certain personal property (including the personal property of members of their household)”. So personal property will usually be excluded.
In addition, as Revenue confirm, capital goods and other equipment belonging to businesses, traders or undertakings established outside the EU which definitively cease their activity and move to the State in order to carry on a similar activity here, may be imported free of import charges, subject to certain conditions.
These include capital goods and other equipment which:
1) Have actually been used in the undertaking for at least a year prior to the date on which the undertaking ceased to operate in the other country.
2) Are intended to be used for the same purposes after the transfer.
3) Are, in relation to relief from VAT, for use in the State in an agricultural activity or in an activity in respect of which it will be accountable for VAT. Accordingly, VAT relief will not extend to goods for use in exempt activities such as banking, insurance, medicine, education.
4) Are appropriate to the nature and size of the undertaking, and;
5) Are imported before the expiry of a period of 12 months from the date when the undertaking ceased its activities in the country of departure
Outside of these parameters, a dispensation may be available in any case. For example, should a drill you wish to import be less than 12 months old, but this drill was a replacement for an older one, usually permission to import this without consequence can be granted by Revenue.
Revenue confirm that capital goods and other equipment which have been admitted duty-free may not be lent, given as security, hired out or transferred, whether for a consideration or free of charge, within one year from the date of importation, unless payment of the import charges (other than VAT) has been made.
Finally there are a few areas where relief will never be granted, in respect of:
1) Means of transport which are not used in the production process of the business nor, in the case of a service business, used directly in the provision of the service.
2) Food supplies of all kinds intended for human consumption or for animal feed.
3) Fuel and stocks of raw materials or finished or semi-finished products.
4) Livestock in the possession of dealers.
Relief from vehicle registration tax will be allowed in respect of motor vehicles being brought permanently into the State as part of the capital goods and other equipment of a business undertaking that definitively ceases its activity outside the State and moves to the State in order to carry out a similar activity here.
A Form C&E 1078 should be completed to declare the goods imported and must be presented to a Revenue official at the time of importation.
Barry Flanagan is a senior tax and payroll manager with taxback.com.
Have a query for our panel of experts about emigrating, life abroad or moving home? Email them to email@example.com. This column is a reader service and is not intended to replace professional advice.