The taxation of individuals in the State is broadly in line with that prevailing in most other OECD jurisdictions, that is to say —
(a) Individuals who are resident in the State for tax purposes (based on the number of days of presence in the State) are taxable here on their worldwide income; and
(b) Individuals who are not resident here for tax purposes pay tax here only on income arising in the State and on income derived from working here.
Residence status for tax purposes is determined by the number of days that an individual is present in Ireland in a tax year. An individual is tax resident in Ireland for a tax year if they are present in the State:
for 183 days or more in Ireland during a tax year or
for 280 days or more in Ireland between the current year and the previous year (although if an individual is present in the State for fewer than 30 days in either year, those days are not counted for the "280 day" test).
Individuals are treated as being present in the State on a day for tax residence purposes if they are present in the State at any time during that day.
The Programme for Government contains a specific commitment to ensure that "tax exiles" make a fair contribution to the Exchequer. A public consultation on tax residence rules was undertaken last year, to prepare for possible further changes in the area. In general, the submissions received considered the present residence rules are clear and workable, and the clarity, certainly and stability of our domestic tax regime enables us to compete effectively in the international economic context.
An Irish domiciled individual claiming to be non-resident for tax purposes and who is living abroad primarily for tax reasons may be subject to the Domicile Levy which is charged on an individual:
- who in any year is Irish domiciled,
- whose worldwide income in the year exceeds €1m,
- whose Irish located property in the year is greater than €5m, and
- whose liability to Irish income tax for the year is less than €200,000.
The amount of the levy is €200,000. Any Irish income tax paid is available as a credit against an individual's liability to the levy.
In Budget 2012 I abolished the "citizenship" condition for payment of the Domicile Levy to ensure that it cannot be avoided by renouncing citizenship. The first year for which the changes applied was the tax year 2012; the levy payment for that year is due by 31 October 2013. Measures in recent budgets to increase the tax take from high earners will also have an impact on so called "tax exiles".