Residence

[Liamos]

A friend of mine returned to Ireland in late 2008 after a decade abroad. She earned alot of money in that time and now wants to gradually bring it back into Ireland. I know there are rules depending on your residence. As I see it she is resident for 2009 but will not be ordinarily resident until 2011. Can anybody tell me how her income will be treated when she is (a) resident and (b) ordinarily resident?

 

[Domo]

Any funds she holds are considered to be capital at the date she returned to Ireland, and as such can be brought in to Ireland with no tax consequences.

Her residence position will determine her tax liabilities on foreign income arising after she returned to Ireland.

I would need a lot more detail regarding her foreign income arising since she returned to Ireland to comment further

 

[Liamos]

Thanks for that. She will be earning interest on this money abroad. How will this interest be treated? Will DIRT be deducted?

 

[Domo]

If not ordinarily resident, will be taxable on any remittances of "income" brought into Ireland.

If the funds are not segregated, income is treated as being brought in before capital, so therefore she will be taxable on the interest in Ireland at her marginal rate of tax.

However, if she can arrange to have the funds segregated - interest going to a separate account - she can bring in the capital free of tax.

This is why it is important to get advice before returning to Ireland, in order to set up relevant accounts so that only capital is remitted.

If amounts are substantial she should take professioanl advice.

www.taxingtimes.ie