27 year old non-resident with €500,000 to invest

[moneybox]

I am an Irish citizen but a resident of nowhere so

I have read this sentence in so many of your threads that you are beginning to sound like a broken record player.

For a 27 year old you sound like you have no idea where you are going, have you thought about your future?? You have €500,000 to invest would you not consider buying a house in a good location like South County Dublin, it looks like half the country want to live there at the moment but they can't afford it but you can, so maybe it might not be a bad idea........

 

[RichInSpirit]

For exposure to Etf's and every other type of investment opportunity I'd stick the 500k into a spread betting account with one of the bigger UK spread betting crowds and play around a bit.
Just be careful of course, you could lose it all, but maybe not.

 

[dub_nerd]

Here is an interesting chart on asset class returns from BlackRock.

Clearly the diversified portfolio reduces very acceptable results over the long term. The portfolio did take a big hit in the most recent recession, but had fully recovered by 2009 and has produced positive results thereafter. This is in contrast to many Irish investors who concentrated their investments in property and are still waiting for a return to positive figures...

People advocating fixed income & cash instruments should not that they rarely perform as well as other asset classes and thus there is a a very significant price to be paid for that guaranteed income and minimal risk offering. In fact when converted to real returns it is not unfair to say that in most cases investors in such products would have been luck to break even.

Wow. I look at the same chart and I see insane volatility. Sure, it looks fine overall from 1993 to 2013. But get your timing wrong or choose the wrong investment mix (or an investment company with the usual large and opaque charges) and you are in nightmare territory, even over 20 year timeframes. Look at the 2000/01 and 2007/08 crashes and the insane run-up since then (which frankly, anybody who knows anything about anything realises this is on the back of monetary easing attempting to "fix" the last crash) and you would have to ask yourself if we are poised for the next big drop ... and a quick look at the telly will confirm that we may actually be in the midst of it right now.

 

[Jim2007]

Wow. I look at the same chart and I see insane volatility.

Well volatility is not the same as risk, which is why in Switzerland at least we do not recommend investing in anything other than cash or near cash investments unless you can commit the funds for at least five years. I believe in Ireland they seem to apply a three year rule.

 

[alwaysonit]

Jim, I would hope the following post is true from this thread?
http://www.askaboutmoney.com/showthread.php?t=188169

The point of DTAs is not to impose a liability to tax, but to prevent double taxation. A DTA cannot impose a taxation or a liability where domestic legislation doesn't provide for it.

If you're not resident here and not taxable here under the domestic code, a DTA cannot make you resident.

He has not one but 3 tax advisors tell him so, but he has not given us their qualification nor their confirmation in writing. And in writing from a country in which it can be relied.

I don’t want to name names but they are all long-serving Irish tax advisors, and between the 3 of them are AITI registered tax consultants, have worked for Revenue before and have independently come up with the same conclusion.

 

[Jim2007]

Jim, I would hope the following post is true from this thread?

The statement is correct, however your understand of it is not correct! You are and have always been Irish resident for tax purposes by virtue of your passport, so there is no need for a DTA to make you resident and subject to domestic tax law.

In the normal course of events, when the Revenue raises a tax assessment on you the defence would to show by virtue of a DTA that you are resident else where and thus not subject to Irish tax law. However since you have failed to meet the residency requirements of any other state, I fail to see how you are going to prove that you stopped being Irish tax resident at some point since all DTAs carry tha nationality clause I quoted.

 

[alwaysonit]

So:
1.A DTA does not impose a liability to tax.
2. The DTA is the only legislation that would suggest I'm Irish resident.

Are you sure I would need to show by virtue of a DTA that I'm resident elsewhere? Or just show proof that I have not fulfilled the required days to become Irish resident and they'll leave me be?

Do you suggest I go to another advisor and include these DTA pieces and see what conclusion they come to, having taken this into account?

 

[alwaysonit]

At the beginning of almost every DTA it says "This Convention shall apply to persons who are residents of one or both of the Contracting States."

Going by the residency rules, I'm not a resident of either and so the DTA has no effect over me. If revenue ask to prove how I stopped being Irish resident at some point I will send them a scan of each page of my passport, although I'm sure they must link up with Irish immigration in cases like this.

Does what I'm saying here make sense?

 

[RichInSpirit]

If you are a professional gambler would you be liable for tax in any case?
Maybe 1% or something small like that.

 

[Jim2007]

Going by the residency rules, I'm not a resident of either and so the DTA has no effect over me. If revenue ask to prove how I stopped being Irish resident at some point I will send them a scan of each page of my passport, although I'm sure they must link up with Irish immigration in cases like this.

Does what I'm saying here make sense?

And that will confirm that you have no established residency anywhere else and so remain Irish resident....

 

[alwaysonit]

I'd hope that once I'm not a resident going by the days rule, which as far as I know is the only rule revenue document (apart from the rules within the treaty that you have highlighted) then the tax treaty tiebreakers cannot make me a resident.

The very first line of most of these treaties says "This Convention shall apply to persons who are residents of one or both of the Contracting States." I would also hope that that this is the first line for a reason - that once you read this line you can disqualify yourself from any of the rules they make further down in it.

The part that you have quoted from the treaties is a subsection of a subsection, it is Article 3A-2-(d). At the beginning of 3A-2, before it goes into the four subsections, it says "Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined as follows" and then the rule you have brought to my attention is mentioned.
However you want to look at it, I'm sure that this disqualifies me.
Any sentance in the English language that says
Where by (a condition) then (a consequence), if you do not satisfy the condition then in this case you do not suffer the consequence.
Although this does not mean the consequence stated cannot happen another way, I am not aware of a condition that would make me suffer this consequence (ie a state of affairs that currently makes me Irish resident).

Jim I really appreciate the time you have spent helping me here and hope that it does not seem that I am trying to shy away from the information you have given me and instead stick to my guns saying that I'm not a resident simply because it benefits me not to be.
I have analyzed it and from the argument I have provided I think that if this went to court my argument would win.

After this lengthy (and possible confusing - sorry!) post, do you agree with my argument Jim? Any other posters have anything to add?

 

[Bronte]

Jim I really appreciate the time you have spent helping me here

I have analyzed it and from the argument I have provided I think that if this went to court my argument would win.

Any other posters have anything to add?

Yes I have.

You are an out an out gambler, and on top of that you have the audacity to come on and state you would win in court.

Go and pay a top accountant/solicitor with the best expertise in this area to confirm what you state is true. It might cost you 5K and save you thousands.

And stop peddeling nonsense like 3 experts have told you that you are non resident.

 

[so-crates]

alwaysonit - I think what Jim2007 is trying to get across to you is that there is a default position. The starting point is "you are tax resident in Ireland", you need to prove you are tax resident elsewhere otherwise you will always be tax resident in Ireland.
Stamps in your passport would not constitute sufficient proof I think. They do not mean you are liable for taxation in any other jurisdiction.

 

[moneybox]

Yes I have.

You are an out an out gambler, and on top of that you have the audacity to come on and state you would win in court.

Go and pay a top accountant/solicitor with the best expertise in this area to confirm what you state is true. It might cost you 5K and save you thousands.

And stop peddeling nonsense like 3 experts have told you that you are non resident.

OP aged 27 is out of the country jusy a few short years and its laughable that he is now saying he is a resident of no place in order to escape paying tax on the proceeds of his rather dubious profession.

 

[Jim2007]

alwaysonit - I think what Jim2007 is trying to get across to you is that there is a default position. The starting point is "you are tax resident in Ireland", you need to prove you are tax resident elsewhere otherwise you will always be tax resident in Ireland.
Stamps in your passport would not constitute sufficient proof I think. They do not mean you are liable for taxation in any other jurisdiction.

Exactly and as the OP has already stated he has checked the DTAs and he does not meet the residency requirements in any other jurisdiction he has been in, so show them his passport would only confirm their case!

 

[elacsaplau]

I am not a tax consultant but have read several books on tax.

Frankly, I am amazed by the idea that if you don't satisfy the prescribed rules for residency in Ireland, you may still be resident by some sort of default - unless you satisfy the residency conditions of some other country.

I genuinely believe Jim and others may be confusing Domicile with Residency and that the advice the OP received from tax specialists is correct.

My confusion now is why doesn't the OP validate the position with one of his tax advisors; and where have the usual tax gurus on AAM gone?

 

[Sophrosyne]

Without commenting on the merits of the OPs “Investment Theory”, the tie-breaker rules are contained in article 4 of the OECD model treaty –

“OECD MODEL TAX CONVENTION​

Article 4​

RESIDENT​

1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
​

b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
​

c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
​

d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
​

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.”

In other words, the tie-breaker rules apply where an individual is, under domestic legislation of both contracting states, deemed a resident of both states.

They do not apply to non-residents of either states.

 

[elacsaplau]

Thank you Sophrosyne

You have just confirmed my understanding clearly and authoritatively.

Perhaps posters can now address the OP's "investment" question??!!

 

[Jim2007]

They do not apply to non-residents of either states.

This is just repeating what has now been said several times! The OP started out Irish resident, By virtue of the various DTAs he has failed to meet the requirements to establish his residence in any other state hence the DTAs nor the convention rules apply. Therefore he remains resident in Ireland.

So far nobody has provide a valid reference to show how the OP can relinquish his Irish resident status, while not establish resident status in another state. Now it is a very long time ago since I took the Irish tax exams, but I do not remember coming across any legislation that would allow for the OP's claim, nor has anyone else pointed us to such legislation, if it exists I'd very much obliged to receive a reference as it would be very useful.

 

[Bronte]

I am not a tax consultant but have read several books on tax.

I genuinely believe Jim and others may be confusing Domicile with Residency and that the advice the OP received from tax specialists is correct.

My confusion now is why doesn't the OP validate the position with one of his tax advisors; and where have the usual tax gurus on AAM gone?

Soo you've read several books on tax, but you are not a tax consultant. Are you qualified to state the legal status of the OP's domicile or residence?

Yet you are able to state that the advice the OP got from 3 tax specialist is correct, despite now knowing the competence or expertise of these 'experts'.

Have you ever heard of expats living the high life in far flung destinations being conned in places like Dubai and other dubious places into believing that the only way is up. They are all at it. Places like that, and elsewhere, Ireland too, they are out there to fleece suckers.

You refer to the tax gurus on this site, you presumably are referrring to the accountants on here, you do realise that this area of law, Conflict of Laws, in relation to domicile etc, is an exceedingly complex area, and no regular accountant would have an idea. You'd need not just a tax expert, but a legal expert and an expert on cross border rules.

The OP needs to back up the experts advice by having it in writing from an expert who is a) legit b) reputable and c) can be sued if incorrect advice is given.