I am advised by Revenue that a person’s Irish tax position depends on the source of the taxable income involved and the tax residence and domicile position of the individual. For example, where a person is tax resident and domiciled in Ireland, s/he will be liable to Irish income tax on his or her worldwide income. This is subject to any relief afforded by a Double Taxation Agreement (DTA). However, where a person is tax resident but not domiciled in Ireland, s/he will be liable to Irish income tax on Irish source income and foreign income to the extent it is remitted (brought into) the State. This is also subject to any relief afforded by a DTA.
Regarding the case in question, Revenue has confirmed that the tax returns filed by the taxpayer (and her deceased husband) for the years in question were completed on the basis of them both being Irish tax resident, but excluded information relating to their domicile status. When completing the tax returns for 2013 to 2018 (self-assessment), the taxpayer/s declared and paid Irish tax on their German Social Welfare Pension/s. The surviving spouse subsequently received a tax bill from the German tax authorities in respect of the same income. As Irish taxes were already paid on this income, the bill from the German authorities created a double taxation situation.
Article 17 of the Ireland/Germany DTA deals with pensions payable under social insurance legislation. Specifically, Paragraph 2 of Article 17 provides sole taxing rights to Germany as the payments are made under German social insurance legislation. As such, the amounts involved in the case in question should not have been included on the self-assessment Irish tax returns filed for the relevant years.
The taxpayer is therefore entitled to seek amendment of the relevant returns. However, any such refund claim/s must be made in accordance with section 865(4) of the Taxes Consolidation Act 1997. This requires that claims must be made no later than the end of the fourth year following the end of the relevant tax year and Revenue has no discretion to operate outside of the legislation as set down.
Article 25 of the Ireland/Germany DTA provides that where a person has been taxed in a manner that is not in accordance with the provisions of the agreement, s/he may present a case to the Competent Authority in the State of residence with a view to obtaining agreement between the relevant States to resolve the position. Such a process is referred to as a Mutual Agreement Procedure (MAP)
Revenue has confirmed to me that the Irish Competent Authority will engage directly with the person’s representative with a view to determining if a MAP can be used to resolve the issue.