The UK has historically been an attractive location for non-UK high net worth individuals. This in large part is due to the availability of non-domicile status. This in effect allows a non-domiciled person to only be taxed in the UK on their UK source income and gains and their worldwide income and gains only to the extent that they remit it into the UK. Domicile is a complex concept but is generally tied to your country of origin.
Due to recent changes in the UK tax system, this has been significantly restricted. In some instances, previously non-domiciled individuals are now considered domiciled. This applies to individuals who have been residents for at least 15 of the last 20 years or individuals with a domicile of origin in the UK.
In addition, the UK has now introduced a remittance basis charge for non-domiciled individuals. Claiming the remittance basis is free of charge for the first 6 years. Thereafter a charge per year ranging from £30,000 to £60,000 is levied until the individual is considered domiciled.
The number of UK non-domiciled individuals dipped below 100,000 for the first time in 2018. It has been estimated that the number of non-domiciled individuals planning on leaving the UK over the next 12 months could be up to 26%. In contrast, Ireland’s number of non-domiciled individuals has increased from 3,393 in 2013 to 7,262 in 2016. This has been driven in part by executives employed at multinational companies moving here and also by take-up of the Irish Immigrant Investor Programme. In addition, it is likely that a number of high net worth individuals are now considering Ireland as an alternative to the UK due to proximity, the similarity of legal and tax systems and commonality of language.
Ireland has a similar non-domicile setup to the UK but with a couple of key differences. Ireland’s non-domicile regime effectively taxes non-domiciled individuals who become tax residents in Ireland on their Irish source income and gains and their worldwide income and gains only to the extent that they are brought into Ireland. If foreign income or gains are not remitted into Ireland, they are not taxable here.
The key features of the Irish tax system for a non-domiciled individual are:
- No remittance basis charge.
- No deemed domiciled rule.
- Non-domicile status can continue indefinitely.
- Ireland has an extensive double taxation treaty network that a non-domiciled but tax resident individual can rely on.
For individuals who are considering moving to Ireland, it is important to assess your status and plan before becoming a tax resident. Key areas to consider would include:
- Establishing your domicile.
- Reviewing the tax residency rules in Ireland. In order to avail of non-domicile status, an individual must be considered an Irish tax resident.
- Consideration of the tax residency rules in the country you were previously tax resident in.
- Understanding how funds from periods before you became an Irish tax resident can be brought into Ireland without triggering a tax liability.
- Understanding your annual tax compliance requirements in Ireland.
If you are interested in becoming a Non-Dom tax resident in Ireland, get in touch with us the form below: