Pension contribution after a year spent working in an EU institution

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Calico

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This is a quite a niche question which I'm hoping someone may be able to give me a steer on....

I have the opportunity to take up a short-term, 12-month contract for the year 2025 in one of the EU institutions.

For such contracts, you don't get any pension contributions. Instead, you are paid a cash amount in lieu.

My understanding is that if I take the contract, I remain tax-resident in Ireland.

However I won't be paying tax here, which is standard for employees of EU institutions .

So my question is: when I return, will I be able to make an AVC and avail of Irish tax relief for 2025?
 
If you are paying no tax in 2025 how could you possibly get tax relief for that year ? I think you've answered your own question. If you are paying some tax in Ireland in 2025 you can make an AVC up to 31Oct2026 for Tax Year 2025 and reclaim some of your 2025 tax.
 
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Calico said:
I have the opportunity to take up a short-term, 12-month contract for the year 2025 in one of the EU institutions.
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Will you be a contract agent or a temporary agent?

Calico said:
My understanding is that if I take the contract, I remain tax-resident in Ireland.
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I don’t think so. You become tax resident in Belgium or Luxembourg or wherever the EU institution is. These are along the usual criteria of 180 days in the year, et cetera. Even if you stay working for this EU institution for life you never lose your Irish tax domicile.

Calico said:
However I won't be paying tax here, which is standard for employees of EU institutions .
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If you are a temporary agent your salary will not be taxable in any EU member state including Ireland. You will in fact pay some EU tax, but you will not be able to avail of tax relief on this EU tax. AFAIK if you are a contract agent you are taxed in the member state of employment.

Calico said:
So my question is: when I return, will I be able to make an AVC and avail of Irish tax relief for 2025?
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I really don’t see how you can claim tax relief in Ireland on tax you haven’t paid in Ireland.
 
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So assuming they pay you 100k plus 10k pension. And you pay no tax on this. Then you are on fact getting tax relief already by paying no tax on the 10k if you decide to put it in as an avc? But you may have thr opportunity in 2025 to backdate your 2024 pension contributions and get tax relief related to 2024.
 
Thanks all for the replies. Makes sense I could not get the relief with no income here.

However, to complicate things a little further, if I take the contract, I would be renting out my apartment (which is a 1-bed) for c.€2,200 per month.

I would likely only do this for six months, giving me an Irish income of €13,200 for the year.

So my next question is would this be subject to 20% or 40% tax (plus USC and PRSI)? i.e. would my EU salary be taken into account for the calculation?

If 40%, can I then avail of pension tax relief?

If 20%, I assume the max I could contribute and get (standard rate) tax relief on would be €3,300 (€13,200 x.25).
 
Calico said:
Thanks all for the replies.
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Will you be a contract agent or a temporary agent? The answer to your other questions depends to a large extent on that!

But in general you can’t top up an AVC from rental income and get tax relief.
 
Dr Strangelove said:
Will you be a contract agent or a temporary agent? The answer to your other questions depends to a large extent on that!

But in general you can’t top up an AVC from rental income and get tax relief.
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It's a short-term contract.
 
Calico said:
It's a short-term contract.
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That doesn’t answer the question.

I have niche expertise here and am willing to provide advice but if you can’t tell me whether your contract says temporary agent or contractual agent I can’t help.

Also it’s not even clear if you will be employed in Ireland or not.
 
If you are getting extra earnings for one year which are far in excess of your normal Irish income.

There is nothing to prevent you from investing a chunk of these earnings into your AVCs. You won't get tax relief for these AVCs during your year away.

You can however claim tax relief from your Irish earnings for future years.

In these future years when maybe cash is tight you can claim the AVC relief.
 
Calico said:
It is B.
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Ah okay. ECB and EIB different regimes from the other four institutions which are bound by what are called the Staff Regulations.

A few points:
  1. You will pay EU tax on your EIB or ECB income. You are not subject to any national taxation in Ireland or anywhere else on this income. Some Irish EU staff note this income on their form 11 in narrative form and note that it is not taxable.
  2. It's clear but bears repeating that EU income cannot be used for tax relief on an AVC. But you can use it as a credit in future as pointed out above.
  3. The tax treatment of your Irish rental income depends on your residence in the relevant tax year. See here and here. You might have a tax obligation in Luxembourg or Belgium on the Irish rental income with credits for tax already paid in Ireland. This is quite niche and you may need a separate thread on it.
  4. Short-term contracts often turn into longer-term situations so be alert to that. For example you may end up in the ECB or EIB pension scheme. You may build up a CGT liability on your Irish apartment over time as it is no longer your PPR.
 
Thank you, that's helpful. For clarity, I would only rent out my apartment for 6 of the 12 months. I don't want to become a full time landlord or register with the RTB etc. I would be spending a good portion of the other six months between both places so hopefully the PPR issue does not arise (I won't have a German PPR). The next question would be to determine what my correct tax obligation on the rental income would be, which as you say, may require a separate thread.
 
Calico said:
I don't want to become a full time landlord or register with the RTB etc.
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Careful! If you have a fixed-term tenancy you have to register with the RTB,

In your shoes you might want to consider some kind of caretaker arrangement or short-term corporate lets.
 
Dr Strangelove said:
Careful! If you have a fixed-term tenancy you have to register with the RTB,

In your shoes you might want to consider some kind of caretaker arrangement or short-term corporate lets.
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As far as I'm aware you only have to register with the RTB for tenancies of longer than six months.

What I would be proposing is drawing up a contract signed by both parties agreeing to a six month lease.

Alternatively, I thought to go down the Airbnb route, subject to getting the necessary planning permission.
 
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