# Puzzling tax assessment from Revenue



## murphaph (2 Sep 2013)

I'm a non-resident landlord living in Germany. I have PAYE type income here in Germany and rental income from Ireland.

Can someone please confirm what I think I know, ie, that non-residents are not liable for PRSI on un-earned income (eg rent).

USC IS due, right? (they have no USC liability even though my income is above the various thresholds and I'm not oer 70 or anything).


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## Joe_90 (2 Sep 2013)

No PRSI if you are paying social insurance in another country.

USC is due if your income is above €10,036!

Out of interest is the Irish rental income subject to Tax in Germany? As you are not domiciled there?


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## murphaph (3 Sep 2013)

Hi Joe,

Thanks for confirming. I'm getting sick of Revenue. Every year there seems to be an issue where they do something like this. I've told them in writing on at least 2 occasions that I am socially insured in Germany etc. because AFAIK it is actually forbidden under the Irish system to pay PRSI contributions if that is the case (unlike say the UK, where expats can keep up their state pension entitlements by continuing to pay NI on a voluntary basis from abroad). I would LOVE if I could maintain my state pension entitlements in Ireland by paying a few bob PRSI but I know it's not allowed and I won't ever benefit from the PRSI contributions.

As to your question...

I'm resident & domiciled in Germany.

Rental income (and income from some other assorted areas like forestry and ship rental) derived in an EU or EEA state (except Germany itself) is not considered for tax purposes in Germany (since 2008). It is not taxable and does not effect the rate of tax you pay on your other non-exempt income.


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## mandelbrot (3 Sep 2013)

Are you sure you're domiciled in Germany? Is your father German?


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## Joe_90 (3 Sep 2013)

That's interesting,  I've come across a couple of cases where due to different treatment income in this instance Case V in Ireland is taxed at 52% for an Irish Resident and 20% for a German resident.


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## murphaph (4 Sep 2013)

mandelbrot said:


> Are you sure you're domiciled in Germany? Is your father German?


No, but domicile just means where you intend to stay, right. It isn't directly related to your citizenship or the citizenship of your parents? I have a German partner and German/Irish son and we intend living here permanently. We are certainly tax resident in Germany.


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## murphaph (5 Sep 2013)

Joe_90 said:


> That's interesting,  I've come across a couple of cases where due to different treatment income in this instance Case V in Ireland is taxed at 52% for an Irish Resident and 20% for a German resident.


I should correct myself. After a quick google I found http://www.daily-paragraph.de/index.php/archives/steuerrecht/auslandsimmobilie/3472 which states that Spain and Finland are excluded from what I said above BUT rental income losses in those countries can be offset against any income in Germany as well.

We discussed this thing on here before actually. A search will probably throw the thread up.


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## mandelbrot (6 Sep 2013)

murphaph said:


> No, but domicile just means where you intend to stay, right. It isn't directly related to your citizenship or the citizenship of your parents? I have a German partner and German/Irish son and we intend living here permanently. We are certainly tax resident in Germany.



Domicile of origin is not easily shed, particularly where a person retains economic ties (such as owning substantial assets) in their country of original domicile. You might want to confirm with Revenue that they accept you're no longer Irish domiciled.


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## Joe_90 (6 Sep 2013)

Is being German domiciled a requirement? 

It appears that a UK domiciled individual resident and ordinary resident in Ireland can avail of the remittance basis for UK rental income, if the changed their domicile to Ireland then taxable on worldwide income. Your situation seems the opposite.


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## murphaph (6 Sep 2013)

To be honest I don't think it matters what my domicile is in this case.


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## murphaph (19 Sep 2013)

So Revenue sent me an amended assessment with no PRSI.....BUT also no USC (whish IS due) and critically without my apportioned personal tax credit (which they gave me last year and which they themselves advised me I was entitled to!). So they still want money they aren't entitled to. This is getting really annoying now.


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## Bronte (20 Sep 2013)

mandelbrot said:


> Domicile of origin is not easily shed, particularly where a person retains economic ties (such as owning substantial assets) in their country of original domicile. You might want to confirm with Revenue that they accept you're no longer Irish domiciled.


 
The fact the OP 'intends' to reside in Germany permanently would be key here.  And there is no way Revenue would have the competence to decide on a person's domicile as it's such a tricky area of law.


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## mandelbrot (20 Sep 2013)

Bronte said:


> The fact the OP 'intends' to reside in Germany permanently would be key here.  And there is no way Revenue would have the competence to decide on a person's domicile as it's such a tricky area of law.



Whatever about "competence", Revenue have the right (in fact it is their job) to make determinations in relation to a taxpayer, which would include whether they are domiciled here or not, and tax them accordingly.

If the taxpayer disagrees with a determination it then becomes a matter for an Appeals Commissioner and/or the courts to determine.

Hence I suggested that Murphaph might be best off just agreeing with both the Irish and German tax authorities that he has acquired a German domicile of choice.


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## murphaph (20 Sep 2013)

I don't even see what domicile has to do with the issues at hand. Revenue accept that I'm non resident. The PRSI issue is a simple one of residency, not domicile. The most annoying thing is that I went through all this last year and I thought it was settled. I ask myself now will I have this hassle every year.


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## mandelbrot (20 Sep 2013)

murphaph said:


> I don't even see what domicile has to do with the issues at hand. Revenue accept that I'm non resident. The PRSI issue is a simple one of residency, not domicile. The most annoying thing is that I went through all this last year and I thought it was settled. I ask myself now will I have this hassle every year.


 
Sorry, I know it's off-topic for the purposes of this query, but it may be relevant further down the line for you.

I think results in recent case law have suggested it is easier than it used to be to shed one's domicile of origin and acquire a domicile of choice, but in the long term wouldn't you be well off to have the certainty of a letter from Revenue accepting that you are non-domiciled - for example if the Domicile Levy was to be extended in the future to cover more people...


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## murphaph (20 Sep 2013)

You might well be right on that score. It also costs nothing to request confirmation in writing but I don't want to confuse them any more than they appear to be right now so I'll get the pressing issues resolved first before asking them for that written confirmation.

What really gets me about this whole mess is that my circumstances are more or less in line with last year and they are not complicated.

I am tax resident in Germany in PAYE type employment paying social insurance (straight away then I am actually prohibited from contributing to the PRSI system in Ireland according to Irish rules). I only have unearned income (rental income) from Ireland, so tax treatment of it should be straightforward. 

The only taxes due to Revenue are income tax and the USC (same as last year), but they made a fist of it again and tried to charge me PRSI (and NO USC which is clearly a mistake) and gave me NO apportioned personal tax credit (s.1032 Taxes Consolidated Act 1997) which they DID give me last year.


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## mandelbrot (20 Sep 2013)

murphaph said:


> You might well be right on that score. It also costs nothing to request confirmation in writing but I don't want to confuse them any more than they appear to be right now so I'll get the pressing issues resolved first before asking them for that written confirmation.
> 
> What really gets me about this whole mess is that my circumstances are more or less in line with last year and they are not complicated.
> 
> ...


 
Do you file online?


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## murphaph (20 Sep 2013)

No. I've never done that. Do you think I could avoid these hassles if I did? If so I'll try it next year.


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## mandelbrot (21 Sep 2013)

murphaph said:


> No. I've never done that. Do you think I could avoid these hassles if I did? If so I'll try it next year.


 
Well I'll put it this way, >85% of all Income Tax returns are now filed on ROS, and Revenue's stated objective is to push electronic channels.

It stands to reason then, that the staff assigned to processing manual Forms 11 are unlikely to be the creme de la creme of Revenue staff.

I would expect that either the ROS offline application or ROS online will be able to correctly calculate your liability, if you complete the form correctly (i.e. there's a tick box for claiming exemption from PRSI).


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## murphaph (21 Sep 2013)

Ok, I'll do it electronically next year and see how I get on. I (possibly incorrectly) assumed that they just basically enter my tax return details into their internal interface to the same back end that ROS connects to. Maybe that's too taxing for them <sorry, couldn't resist>

A quick (hypothetical) question if I may....

If my Irish income had been less than €10,036 in 2012, would there be any liability to USC? ie, would they take into account my German salary and then charge me 2% of my Irish income or is it ONLY the Irish income that is taken into account when deciding if a non-resident has a liability to pay USC and to what extent?


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## murphaph (29 Jun 2014)

Just a s a follow up to this: I filed on ROS for the first time for tax year 2013 and hey presto it assessed me correctly. No PRSI nonsense. Should have started using ROS years ago in hindsight!


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## suzie (29 Jun 2014)

Is ros only applicable to non PAYE ?


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## murphaph (29 Jun 2014)

No. My mother is PAYE and also registered for ROS for her rental income. If you have a need to file a Form 11 then you can get registered for ROS.


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