# Definition of 'remittance' of foreign income



## funcrusher (17 Aug 2008)

I am a non-domiciled Irish resident tax payer, which means I am only taxed in Ireland on foreign investment income which I remit to Ireland. Likewise I can remit capital without liability to income tax. Question: what constitutes a 'remittance of income', apart from the obvious. If eg I save my foreign interest income in a foreign bank account, does it eventually become capital which I can remit tax-free?

I have tried the revenue commissioners website and can't find the answer.


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## Mark_Mc (17 Aug 2008)

The definition of remittance of foreign income is very wide for tax purposes. In summary, to illustrate how wide it can be if, for example, you finance personal expenditure in Ireland with borrowings (credit card, personal loan etc) and repay those borrowings with foreign income without that income ever being lodged to an Irish bank account you will be treated for tax purposes as having remitted income to Ireland. 

The income must be non irish and non UK to be covered by the remittance basis. 

I would suggest you review Section 72 of the Taxes Consolidation Act 1997 for more information. 

Among other things the section provides that foreign income applied abroad by a person resident or ordinarily resident in the Ireland in satisfaction of:


any loan made in Ireland or any interest on such a loan, or
any loan made outside Ireland and received in or brought to Ireland, or
any debt incurred in satisfying in whole or in part the above loans,
is to be treated as having been received in Ireland as a remittance of foreign income.

Furthemore, if you 

(A) borrow outside of Ireland, 
(B) repay those borrowings out of foreign income prior to bringing the borrowed cash to Ireland and 
(c) then bring the borrowed cash to Ireland

you will be treated as remitting foreign income to Ireland. This is in accordance with Section 72(2) and Section 72(3) Taxes Consolidation Act 1997.

Visit my profile and email me if you need any assistance

Regards,

Mark



funcrusher said:


> I am a non-domiciled Irish resident tax payer, which means I am only taxed in Ireland on foreign investment income which I remit to Ireland. Likewise I can remit capital without liability to income tax. Question: what constitutes a 'remittance of income', apart from the obvious. If eg I save my foreign interest income in a foreign bank account, does it eventually become capital which I can remit tax-free?
> 
> I have tried the revenue commissioners website and can't find the answer.


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## funcrusher (18 Aug 2008)

Mark: thanks. I looked at the 197 Act but it didn't seem to clarify my problem ie when does foreign income saved overseas turn into 'capital' which can be remitted tax-free?


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## Mark_Mc (18 Aug 2008)

Hi funcrusher, 

To be honest you'r unlikely to get a free answer to this question on any board. There would be a bit of work in researching this point (I believe income wouldn't lose it's character despite even being invested in an asset and being turned into a profit but obviously, in an engagement with a client I would do alot more work to confirm this point so I am not going to hang my hat on it here.) There's too much risk and generally risk (high risk) carries more reward than low risk. I mean if someone says income can be turned into "capital" and you get audited and taxed on "capital" that was previously income, you would need to appeal to the appeal commissioners etc etc and there would be alot of fees incurred so someone giving an answer here may not be willing to put their neck on the block without reward to cover insurance etc. That's the tax business for you, practitioners are required to carry indemnity insurance due to the uncertainty of certain aspects of the law.

If you want to contact me visit my profile and follow the links from there.

Regards,

Mark

Incidentally, did u visut the profile?



funcrusher said:


> Mark: thanks. I looked at the 197 Act but it didn't seem to clarify my problem ie when does foreign income saved overseas turn into 'capital' which can be remitted tax-free?


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## funcrusher (19 Aug 2008)

Looked for the 'profile' link but couldn't find it. looks like nobody knows the answer.


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