Michael D. Higgins
Ceist:80 Mr. M. Higgins asked the Minister for Finance his plans to review the tax laws in regard to residency status; and if he will make a statement on the matter. [25771/03]
Written Answers. - Tax Code.
As the Deputy may be aware, the residence rules were last updated in the 1994 Finance Act following a comprehensive review of the matter by the Revenue Commissioners and my Department. Prior to this, the rules were based on a mixture of statutory provisions, old case law and Revenue administrative practice, which was an unsatisfactory situation. The new residence rules set out in the 1994 Finance Act both simplified and clarified the whole area and were generally welcomed.
All income earned in the State is normally taxable here. Therefore, if an individual is employed in the State, tax is paid here on his/her employment income. If an individual is resident in another State, that person is then taxable in the other State but gets credit for any tax paid in the State on such Irish income.
Under Finance Act 1994 rules, a person is regarded as resident in the State for tax purposes in a tax year if he or she spends: 183 days in the State in that year; or 280 days in aggregate in that tax year and the preceding tax year. An individual who is present in the State for 30 days or less in a tax year will not be treated as resident for that year unless he or she elects to be resident. In addition, a day will only count if the individual is present in the State at the end of the day.
Section 69 of the Finance Act 2003 contains an amendment to Irish domestic law which imposes a charge to capital gains tax on an individual in respect of a deemed disposal of certain assets on the last day of the last year of assessment for which the individual is taxable in the State, prior to becoming taxable elsewhere, where the individual disposes of these assets while resident outside the State and returns to the State within five years. I announced this anti-avoidance measure in Budget 2003 on 4 December 2002, with effect from that date. I have no plans to further review the tax laws in regard to residency status.
Question No. 81 answered with Question No. 21.
Question No. 82 answered with Question No. 10.