Background
I'm an Irish citizen who recently moved to Austria, and I've some general enquiries regarding my tax obligations post-relocation.
For brevity, here's some relevant detail:
With the information outlined above, I hope I've highlighted some of complexity I'm facing in regards to fully understanding my tax obligations. I only aim to be broadly accurate, rather than precise, and I welcome any observations on my judgment.
To ensure I remain compliant in both Ireland and Austria while avoiding double taxation, I would appreciate advice and clarification on the following questions:
I'm an Irish citizen who recently moved to Austria, and I've some general enquiries regarding my tax obligations post-relocation.
For brevity, here's some relevant detail:
- I permanently left Ireland for Austria in 2024.
- I ceased my Irish PAYE employment on 23rd May 2024.
- I started my new job in Austria on 1st July 2024 and established normal tax residence there from that date onward.
- I informed Revenue of my departure and applied for split-year tax treatment for 2024. Upon Revenue’s advice, I claimed unemployment repayment, which I summarily received. Furthermore, I updated my residency address via myAccount on their recommendation.
- Due to receiving company share options in the past (prior to 1st January 2024) I'm a chargeable person and therefore do self-assessment by filing an Income Tax Return (Form 11) via ROS annually.
- Although I have physically left Ireland and now consider Austria my permanent domicile, I understand that, because I was continuously resident in Ireland for the preceding three tax years, I am still deemed “ordinarily resident” there. As a result, I will remain liable for Irish tax on my worldwide income for the next three years, until my ordinary residency in Ireland expires.
- However, this of course raises some complexities regarding my tax obligations. Namely with regards to declaring and paying tax on my worldwide unearned income (i.e. capital gains from share disposals, share dividends and deposit interest).
- Residing in Austria now, I understand that Austria would likely have primary taxing rights over this unearned income, and I will therefore become liable to pay tax on it in compliance with Austrian tax regulations.
- At the same time, as an ordinarily resident individual in Ireland, I will also be required to declare this income to Irish Revenue and pay Irish tax on it.
- I'm aware that this dual-obligation is mitigated by the Double Taxation Agreement (DTA) relief between Ireland and Austria. From a glance, I believe this provisions a 'credit-method' approach, based on applying foreign tax credits to offset tax already paid abroad (i.e. in Austria).
- Being ordinarily resident in Ireland, any potential worldwide gains are liable to Irish CGT at 33%. However since I live and work in Austria, Austria likely has primary taxing rights on such income (Austrian CGT is 27.5%).
- Hypothetically then, if I had a chargeable gain, I would first pay Austrian CGT at 27.5%, followed by Irish CGT at 33%, and then claim a foreign tax credit for the 27.5% Austrian CGT paid, ensuring I only owe the difference (5.5%) to Irish Revenue.
- I receive foreign dividend income from foreign shares (i.e. companies not resident in either Ireland nor Austria).
- In Ireland, such income is treated as income, and subject to Income Tax, PRSI and USC.
- As I no longer receive earned income in Ireland, my effective rate for Income Tax, PRSI and USC would need to be calculated appropriately.
- In Austria however, foreign dividends are treated as investment income and are instead subject to a flat rate tax of 27.5% for individuals.
- Similar to CGT treatment, I assume I would likewise pay Irish Revenue tax owed on my foreign dividend income, and apply for DTA relief.
- I'm aware I'd also need clarification on how DTA relief applies to dividends that have additional withholding tax deducted by the source country.
- I have two EU-based bank accounts (Lightyear and Trade Republic) which accrue deposit interest on my cash balance.
- Such interest is liable to DIRT at 33% which I would normally pay on my Income Return.
- However, as I'm now a non-resident individual, I believe I can become exempt from DIRT provided I complete a non-resident declaration.
- Provided I have an exemption, I'm uncertain whether this would still necessitate a declaration of deposit interest (i.e. reporting obligation) on my Irish Income Return, if DIRT is no longer applicable for deduction.
- For completeness, deposit interest is taxed at a flat rate of 27.5% in Austria.
With the information outlined above, I hope I've highlighted some of complexity I'm facing in regards to fully understanding my tax obligations. I only aim to be broadly accurate, rather than precise, and I welcome any observations on my judgment.
To ensure I remain compliant in both Ireland and Austria while avoiding double taxation, I would appreciate advice and clarification on the following questions:
- The nuances of the double-taxation relief process still elude me, and I don't feel confident in applying my underdeveloped understanding just yet. Likewise, I have yet to begin to learn how to declare and pay tax in Austria. For this reason, I feel it's pertinent to seek professional advice on this matter. I'd welcome advice on how to approach this, and whether I should seek tax advisors from both jurisdictions.
- Is there anything further I need to do to ensure my “ordinarily resident” status is properly documented and managed for the three-year period following my departure? I've simply changed my residency address in MyAccount, but perhaps I'm overlooking something more formal.
- Correspondingly, when I deem myself no longer “ordinarily resident” in Ireland after three years living abroad, do I notify Irish Revenue in some manner or just entirely cease to file Irish Income Returns going forward?
- In cases where Austrian CGT has been paid, are there any specific forms or documentation required when filing a Form 11 to ensure the foreign tax credit is accurately applied?
- The taxation of dividends seems especially complicated to me (especially with the inclusion of source-country withholding tax), and I'd welcome clarification on whether my understanding is well-founded.
- Do I need to submit a non-resident declaration for exemption from DIRT? And will I still need to declare EU-based deposit interest on my Irish Form 11? Or can this income solely be reported and taxed in Austria going forward?
- Lastly, given the complexity of my circumstances, I'd appreciate general recommendations on how best to approach my tax obligations through this transition period.