Taxation of income from an overseas PHI policy.

Marsupial

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Interesting one here, hope someone can help. A friend has a terminal illness. He worked in the USA for over a decade but is now back in Ireland and has had to give up work for health reasons. While in the 'States he took out a Permanent Health Insurance policy which he funded from his after tax income. He has continued to pay into it while working in Ireland, but has never claimed tax relief on the premiums. He is now claiming for loss of income under his US policy. In the States, the benefits (i.e. regular income) from the policy would be non-taxable because it had been funded from his after-tax income.

He wants to know whether the income paid under this policy would be tax free if he has it paid to his Irish bank account. If not, he will leave it in the States, which would be inconvenient, but is feasible. Both he and I have searched Revenue's website extensively but cannot find a definitive answer.
 
First of all, if he is back in Ireland and is now resident or ordinarily resident, he is taxed on his world-wide income, so leaving the income in the States has no bearing on it being taxable or not

If your friend has American nationality or dual nationality, he will be taxed by the americans as well as the Irish.

Payments from PHI are normally taxable in Ireland - tax relief was available on premiums paid to approved PHI schemes
 
Will the policy still pay out now that he has left the US? I’m not an expert but many policies have clauses about residence. Phi providers look hard at any claims re t&cs. Maybe worthwhile having a look at the pol conds.
 
As mentioned above, which bank account it's paid into is irrelevant.

However, you'll need to get clarification on this, but I think it would be taxed as an 'non-approved' scheme, in which case it's only assessed for tax where benefits have been received for 12 months prior to the year of assessment. I'm not familiar with this area, si hopefully someone more knowledgeable will help.

https://www.revenue.ie/en/tax-profe...ains-tax-corporation-tax/part-15/15-01-10.pdf

" Where a group scheme or policy is not approved then no relief is due
in respect of any contributions or premiums paid and no assessments should be
made in respect of any benefit paid, unless the benefit has continued for at least 12
months prior to the year of assessment."
 
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