# Foreign P60



## user name (15 Nov 2012)

Trying to enter Swiss P60 details foreign on Ros. If I go into foreign income, then foreign employments and enter  pay and tax i end up with a big enough tax bill am i missing something else.


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## bazermc (15 Nov 2012)

Is Ros giving you a credit for the Swiss tax paid, at the end of the computation


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## user name (15 Nov 2012)

When it shows up on Form 11 it is not showing the full amount for Income or the full amount for tax paid. I think i might have it in the wrong section.


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## Gervan (15 Nov 2012)

In Double Taxation Treaty calculations, the income and tax get restated to show the tax as at Irish tax rates.


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## user name (15 Nov 2012)

48500 gross and 13500 tax paid showing up as 40700 and 5600 tax paid leaving a tax bill here of over 3500 to be paid, seems high.


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## Gervan (15 Nov 2012)

I wonder if you're being charged USC by the ROS calculation, when you shouldn't be. Can you work out whether USC is being charged on your Swiss earnings?


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## mandelbrot (16 Nov 2012)

Gervan said:


> I wonder if you're being charged USC by the ROS calculation, when you shouldn't be. Can you work out whether USC is being charged on your Swiss earnings?



Why shouldn't USC be charged on the Swiss employment income - if it's case III income isn't it liable to the charge?


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## Gervan (18 Nov 2012)

I thought the double taxation treaty would apply, and USC being an income tax would not apply to the Swiss employment income. I'd better check this up.


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## mandelbrot (18 Nov 2012)

The wording of the relevant Article in the Swiss DTT is:
_"__Subject to the provisions of the law of Ireland regarding the allowance as a credit      against Irish tax of tax payable in a territory outside Ireland (which shall not affect the      general principle hereof):
Swiss tax payable under the laws of Switzerland and in accordance with this              Convention, whether directly or by deduction, on profits, income or chargeable gains              from sources within Switzerland (excluding in the case of a dividend tax payable in              respect of the profits out of which the dividend is paid) shall be allowed as a              credit against any Irish tax computed by reference to the same profits, income or              chargeable gains by reference to which the Swiss tax is computed..."

_The Case III income is correctly chargeable for USC since it is part of Total Income. There is no provision to confer a credit against USC for the foreign tax paid, and if you think about it, would you take the credit against income tax first, and then against USC, or vice versa, or would the credit be available against both, in the absence of a provision to state otherwise... I'd suspect the Revenue interpretation of the DTT would be that USC is by definition not income tax, nor would it fall within the definition (per Article 2 of the DTT) of _"identical or substantially similar taxes which        are subsequently imposed in addition to, or in place of, the existing taxes".

_Schedule 24 to TCA 97 states _"the Irish taxes means income tax, income levy, universal social charge and corporation tax". _It then goes on to say that _"__Subject to this  Schedule, where under the arrangements credit is to be allowed against  any of the Irish taxes chargeable in respect of any income, the amount  of the Irish taxes so chargeable shall be reduced by the amount of the  credit....  Nothing in  this paragraph shall authorise the allowance of credit against any Irish  tax against which credit is not allowable under the arrangements."

_ It's an issue I've been looking at recently for an Irish resident relative who is being subjected to the 10% rate of USC on foreign employment income (when he's already paying Income tax at a very high rate in the foreign country), so I'll revert back, probably in a couple of months after some correspondence with Revenue, with something a bit more concrete. Wouldn't be holding out too much hope though, short of someone going to ECJ...


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## Joe_90 (19 Nov 2012)

Hi guys couple of things come to mind.  If they are resident in Ireland and chance trans  border relief is available.

Also found this in the USC FAQ point 1.21 USC & DTA
http://www.revenue.ie/en/tax/usc/universal-social-charge-faqs.pdf

Not my area but it may be that ROS is not computing the DTA Relief properly!


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## smeharg (19 Nov 2012)

It's not as straightforward as calculating the Irish tax then taking off the foreign tax paid.

1. Calculate the Irish tax based on gross foreign income to ascertain the effective Irish tax rate.
2. In this case the effective Irish rate (14%) is lower than the effective Swiss rate (29%) so the net income received (ie 48,500 less 13,500 = 35,000) is grossed up at the effective Irish rate to arrive at the amount subject to Irish tax, ie 40,700.
3. Calculate Irish tax on 40,700
4. Give credit for unrelieved foreign tax of 40,700 @ 14% = 5,700.

I think you only see steps 3 & 4 in ROS.


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## mandelbrot (19 Nov 2012)

smeharg said:


> It's not as straightforward as calculating the Irish tax then taking off the foreign tax paid.
> 
> 1. Calculate the Irish tax based on gross foreign income to ascertain the effective Irish tax rate.
> 2. In this case the effective Irish rate (14%) is lower than the effective Swiss rate (29%) so the net income received (ie 48,500 less 13,500 = 35,000) is grossed up at the effective Irish rate to arrive at the amount subject to Irish tax, ie 40,700.
> ...



But shouldn't the Irish effective rate calculation include the USC... or shouldn't the same operation be performed for USC as for income tax...


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## smeharg (19 Nov 2012)

mandelbrot said:


> But shouldn't the Irish effective rate calculation include the USC... or shouldn't the same operation be performed for USC as for income tax...


 
I think so.  But we don't know whether it has or not as OP hasn't given enough info to determine how the Irish effective rate or the final liability were calculated.


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## Joe_90 (20 Nov 2012)

Don't think ROS gives any relief for USC,  14% would seem very low if it did on gross of €48,500.


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## smeharg (20 Nov 2012)

Joe_90 said:


> Don't think ROS gives any relief for USC, 14% would seem very low if it did on gross of €48,500.


 
You're right.  I just ran a few test figures and the Irish effective rate calculared by ROS ignores USC.


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## mandelbrot (20 Nov 2012)

smeharg said:


> You're right.  I just ran a few test figures and the Irish effective rate calculared by ROS ignores USC.



I think you'd actually need a separate effective rate for USC...


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## smeharg (20 Nov 2012)

mandelbrot said:


> I think you'd actually need a separate effective rate for USC...


 
Why? You just need one effective rate that includes income tax and USC.


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## WizardDr (20 Nov 2012)

@smeharg jasus no - if you did that our shaggin 'marginal' rate would be in the high forties of fifties - and put a big hole in the sociliasts 'tax the rich' campaign. Whatever Joan Burton stands for, she wont agree to that as the game would be up.


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## mandelbrot (20 Nov 2012)

WizardDr said:


> @smeharg jasus no - if you did that our shaggin 'marginal' rate would be in the high forties of fifties - and put a big hole in the sociliasts 'tax the rich' campaign. Whatever Joan Burton stands for, she wont agree to that as the game would be up.



We're talking about the "Irish Effective Rate" used in calculating a credit for Double Tax Relief, you seem to be throwing your tuppence in about something completely unrelated!


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## smeharg (21 Nov 2012)

WizardDr said:


> @smeharg jasus no - if you did that our shaggin 'marginal' rate would be in the high forties of fifties - and put a big hole in the sociliasts 'tax the rich' campaign. Whatever Joan Burton stands for, she wont agree to that as the game would be up.


 
I think you're confusing "marginal" with "effective".  It's hardly a secret that the marginal rate of tax is 52% (55% for self-employed). 

As mandelbrot pointed out you need to read the rest of the thread.  An individual's effective tax rate (total tax liability over total income) is used to calculate the amount of foreign income chargeable to Irish tax and the credit for foreign tax paid. It would appear that this effective rate should include USC, however ROS is excluding it from the calculation.


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## Jim2007 (21 Nov 2012)

user name said:


> Trying to enter Swiss P60 details foreign on Ros. If I go into foreign income, then foreign employments and enter  pay and tax i end up with a big enough tax bill am i missing something else.



Two questions:

- What permit did you have when you earned this income: L, B, B-EU, or G?

L and G are automatically non-resident, but B and B-EU are permeant resident status and may have an impact on how your final Swiss tax bill is calculated.

- The document you are calling a foreign P60, was that issued by your Swiss employer or the Swiss tax office?

If it is the document issued by your employer, then it is not a definitive tax statement, but a statement of facts to be used in the tax calculation.  How the tax is actually calculated  will depend on the community and canton you stayed in while employed over here.


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## smeharg (21 Nov 2012)

Jim2007 said:


> Two questions:
> 
> - What permit did you have when you earned this income: L, B, B-EU, or G?
> 
> ...


 
Are you saying he may not actually be liable to any tax in Switzerland, depending on residency status as determined by his work permit?  In which case he should seek a refund from the Swiss tax authorities?

I think most of the posters worked on the assumption that:

1. The figure quoted was the actual tax paid in Switzerland
2. OP is taxable in both countries

If the question of liability to Swiss tax is being raised, then equally, the questions of liability to Irish tax and the requirement to file an Irish tax return should also be raised.


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## user name (30 Nov 2012)

From Ros

Salary Wife                26000
Foreign Inc                40741
Total Inc                   66741

Irish Effective Rate       13.75

Double Taxation Relief   5602.16

Prsi on Foreign Inc  4%  1629.64
Usc also chg on full amount

One other point working through Irish based company who are paying employers prsi here @ 10.75% tax related code H1, so should i tick exempt from prsi option.

Many Thanks


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## Jim2007 (30 Nov 2012)

smeharg said:


> Are you saying he may not actually be liable to any tax in Switzerland, depending on residency status as determined by his work permit?  In which case he should seek a refund from the Swiss tax authorities?



The reverse!  Holders of C, B or B-EU permits are automatically considered to be permanent Swiss residents and as such are taxable in Switzerland on all income etc.!  It is normally assumed that someone who hold one of the above permits meets the residency criteria under the double tax agreement..

Holders of L permits are assumed to be non resident, but subject to determination by the IOT, the reason being that an L permit can be issued for a period of 3 months to several years.   Salaries paid to L, B or B-EU permit holders are subject to a withholding tax...

Since the OP has not told us if he is referring to a document issued by his employer - which would only show the withholding taxes or a determination by the Swiss IOT, it is not possible to conclude what his situation is...

But I would expect that using the withholding tax figure in an Irish return is incorrect, because in fact it could in some circumstances be partially or even fully refunded!!!


Note: Just for information, C permit holders and citizens are not subject to withholding taxes and we receive our salaries gross - we pay taxes once a year in a lump sum.


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## user name (30 Nov 2012)

Document issued by Swedish tax agency.


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## user name (3 Dec 2012)

Entering total pay of 48776 and 13637 tax paid. This is what ros have given me. Am i missing something as i just think its a bit high. Thanks





Interest/Income from Securities/Possessions-Self
40324*Total Income*40324
*Net Position*

Income*40324*Total*40324
*Irish Effective Rate*

*Irish Effective Rate*12.86
*Allowances / Reliefs / Deductions*

*Total*0
*Taxable Income*

*Taxable Income*40324 
*Charged To Tax As Follows*

Standard Rate40324 @ 20% =8064.80*Total Income Tax*8064.80
*Credits / Reliefs set against Tax on Income*

Double Taxation Relief5185.76Personal Credit2879.04*Total*8064.80*Net Tax Liability*0
*PRSI/USC/TRS*

Universal Social Charge-Self10036 @ 2% =200.72Universal Social Charge-Self5980 @ 4% =239.20Universal Social Charge-Self24308 @ 7% =1701.56*Total*2141.48
*Total Liability*

*Payable *2141.48


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## mandelbrot (3 Dec 2012)

Not sure if your issue is with how the calculation works, or what?

Here's the explanation of the calculation nonetheless:

First calculate the Irish tax liability if there was no foreign taxation:

Income 48,776

41,800 @ 20%: 8,360
6,976 @ 41%: 2,860
Total notional tax: 11,220

Less Tax credits:
Married couple: 3,300
PAYE employee: 1,650

Tax payable: 6,270

Tax payable as a % of income: 6270/48776 = *12.86%* - Irish effective rate

Next calculate foreign effective rate: 13637/48776 = *27.96%* - Foreign effective rate

The  amount of Foreign income and tax included on the Irish tax computation  is the net foreign income (48,776 - 13,637 = 35,139), regrossed at the  lower effective rate, in this case the 12.86%. 
So the income is: 35,139/(1-0.1286) = 40,324.
And the credit for foreign tax is: 40,324 @ 12.86% = 5,186.

So you're getting full credit against Irish tax for your foreign tax paid, in a roundabout way. What you are paying is PRSI & USC. If you've already paid PRSI through payroll then you should claim the exemption.


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## user name (3 Dec 2012)

Mandlebrot

Thanks for that.

So it is right to be charged USC. And for USC not to be included in effective rate calculation.

Also if person was working abroad for 52 weeks of the year is there anyway they come become exempt from paying irish tax.


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## mandelbrot (3 Dec 2012)

user name said:


> So it is right to be charged USC. And for USC not to be included in effective rate calculation.



I didn't say it was right, I just said that's the way it's calculated by Revenue... I'm actually in the process of putting together a detailed query for a relative who's been badly affected by the USC treatment of his foreign PAYE income, and its omission from the double taxation relief calculations. I won't be holding my breath on there being a change in interpretation, short of someone going all the way to the ECJ though.



user name said:


> Also if person was working abroad for 52 weeks of the year is there anyway they come become exempt from paying irish tax.



Yeah, it's called being non-resident!


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## user name (3 Dec 2012)

I clicked non resident on ros.  Thanks for the info.


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## mandelbrot (3 Dec 2012)

Are you non-resident though?! Or rather I should say, WERE you non-resident for the year in question. There's a couple of different tests to be applied.


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## user name (4 Dec 2012)

Worked abroad all year home for holidays etc, same this year, was here in 2010


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## mandelbrot (4 Dec 2012)

So if you were here for >280 days in total for 2010 and 2011, then you were tax resident here in 2011.

You may not be tax resident here in 2012 though based on what you've said. i.e. not here for >183 days (test 1), and not here for >280 days between 2011&2012.


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## user name (4 Dec 2012)

So if not tax resident can it be left off form 11 which has to be prepared for other income


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