Will the money I earned abroad be taxed when I move home?
Ask the Experts: I don’t pay tax in the Middle East, but will I have to if I bring my savings back?
On returning to live in Ireland from overseas, workers are entitled to a ‘split-year’ tax relief on their income.
I have been living and working in the Middle East for the past 10 years and I am considering returning to Ireland with my family. I have banked with non Irish entities during this time with my salary paid directly to them. If I come back to Ireland and move my bank account to the country, do I face tax payments on bringing my income from abroad? I own a property in Ireland which I let, and have made annual tax returns on this with Revenue. The company I have worked with is not Irish based. If I returned to Ireland, I would be most probably working for a new company.
Answer: Barry Flanagan, tax manager with Immedis
One the understanding that you are an Irish citizen, you would be regarded as “Irish domiciled” for tax purposes. Your domicile is the country where you live with the intention of remaining there permanently. Your domicile can be different to your country of residence, or your nationality.
Currently, while you are still living abroad, you are regarded as a non-resident, Irish domiciled individual, and as such you are taxable on your Irish source of income only (i.e. on your rental income only). You do not have to pay tax on income earned in another country.
Returning to Ireland in a year’s time with the intention to live there for the following years will mean that you would be considered Irish resident and domiciled, and would therefore be taxable on your worldwide income (i.e. all of your income would fall back into the Irish tax net, regardless of where your bank account is located).
The money you may have built up in your account overseas can be transferred to an Irish account on your return without you having to pay tax on it.
There is also a tax relief available for the year you return to Ireland, called “split-year relief”, in respect of foreign employment income earned before you return to Ireland and become Irish resident again. You can apply for split-year relief to the Irish Revenue by a simple notification (a one-line letter will do). That way you can exclude the foreign income earned prior to your return to Ireland in that year’s tax return, but still benefit from a full year’s worth of Irish tax credits and bands.
For more information on tax residence rules in Ireland, see citizensinformation.ie/en/money_and_tax
Have a query for our panel of experts about emigrating, life abroad or moving home? Email them to firstname.lastname@example.org. This column is a reader service and is not intended to replace professional advice.