What qualifies as a ‘Remittance’?

As a general rule, a remittance is classed as when any foreign income that you earn while you are an Irish tax resident is brought into Ireland in any capacity. It is the actual sum received in the State in the relevant year rather than the income arising in that year.

This includes certain assets purchased overseas that are brought into Ireland for resale, as well as money withdrawn from overseas bank accounts at an Irish bank.

The resale of assets in Ireland that were purchased overseas would mean that the proceeds of that sale are automatically considered a taxable remittance and would make you liable to pay Irish income tax on that sale.

Will the Remittance Basis of Taxation benefit me while I hold Irish tax residency status?

The law of remittance basis is mainly designed to better structure non-domiciled foreigners’ tax affairs while living in Ireland as tax resident.

This type of taxation ultimately limits your overall tax exposure and manages it at acceptable levels in order to benefit you as an individual.

When will I be classed as resident in Ireland for tax purposes?

Your Irish tax residency status will depend on the number of days that you are present in Ireland during the tax year.

You will be classed as resident for tax purposes if any of the following apply to you:

• You have spent 183 days or more in Ireland in a tax year
• You have spent 280 days or more in Ireland over a period of two consecutive tax years (you will be classed as resident for the second year)

You will be classed as ordinarily resident in Ireland for the tax year when you have been an Irish resident for three consecutive tax years.

What other terms should I be familiar with when handling RBT?

‘Split-Year’

It is possible that where an individual is tax resident in two countries for the same tax year, they are liable to tax on the same income.

Irish legislation provides a relief referred to as “split-year” residence which essentially means you are not taxed on your employment income to the extent it relates to work completed in the foreign country you are arriving from up to the date of arrival in Ireland.

The relief can also apply in the year of departure from Ireland subject to certain conditions.

Pre-residency Capital –

This type of capital refers to any foreign income or gains that may have been earned before your Irish tax residency was triggered.

Pre-residency capital can be kept in foreign cash-savings accounts.

Income Generating Accounts –

This type of account can be any type of bank account but is solely used for the purpose of depositing any foreign-earned income or gains.

Mixed Funds Accounts –

This can include your pre-residency capital, as well as taxable foreign income in Ireland and any post-residency capital gains.

What sort of advice do I need to understand RBT going forward?

It’s also important to keep track of your remittances and to keep separate accounts to track how foreign income is being spent.

It’s therefore vital to seek professional advice and can benefit largely from doing so as far in advance as possible and to structure your accounts to maximise the benefit of the remittance basis of tax.

If you are planning a relocation to Ireland, about to become Irish tax resident (or unsure if you are about to), it is crucial to understand how to best protect your finances and minimise your tax exposure.