Can I hold UK or Offshore Investments while being an Irish Tax Resident?

Can I hold UK or offshore investments while being an Irish Tax Resident?

Yes, you are entitled to hold UK or other offshore investments while an Irish Tax Resident but the structure of the investments as well as your tax status will determine how gains and income will be treated from an Irish tax Perspective.

There are many cases where an individual worked in another jurisdiction and has accrued investments or pensions outside the state during this time and they are unsure what to do with them when they return to Ireland.

Investments and pensions can also be held outside the state when a non-Irish individual decides to reside here for whatever reason and is unsure how their foreign assets will be treated in Ireland once they become an Irish tax resident.

 

Irish Tax Residency:

Becoming an Irish tax resident is determined by your residency status and the number of days you spend in Ireland during a tax year. The rules regarding tax residency can be complex, and it's always advisable to consult with a tax advisor or the Irish Revenue Commissioners for personalized advice. However, on a high level, the rules are as follows:

1. You spend 183 days or more in Ireland in a tax year. These days can be consecutive or non-consecutive.

 

2. You spend 280 days or more in Ireland over a period of two consecutive tax years, with a min of 30 days in each tax year.

 

If you meet either of these criteria, you will be considered a tax resident for the entire tax year. It's important to note that the tax year in Ireland runs from January 1st to December 31st.

Additionally, there are specific rules and considerations for individuals who are arriving in or leaving Ireland during a tax year, as well as rules for determining tax residency for individuals with dual residency in multiple countries. Advice should be sought in this regard to determine your residency status.

 

Irish Tax Resident and Irish Domiciled:

As an Irish domiciled tax resident, you are generally subject to tax on your worldwide income and gains. This means that any income or gains generated from foreign investments would typically be subject to Irish taxation.

The type of tax you will be liable to will be very much dependent on the overall structure of the investments held in the other jurisdiction as the investments could be subject to Income Tax, Capital Gains Tax (CGT), Exit Tax, or a combination of all three. Double Taxation treaties between Ireland and the jurisdiction the asset is held can also come into play.

If you hold a foreign investment account, once you become an Irish tax resident again you will be taxed on any gains or income this generates even if it remains outside the state so it may be advisable to sell down the assets and move the proceeds to an Irish Investment account which will be Irish tax compliant.

You should seek financial advice in this regard as retaining foreign investments can become complicated and create unnecessary taxes and administration headaches.

 

Irish Tax Resident and Non-Irish Domiciled:

Ireland offers certain tax exemptions and reliefs for individuals who qualify for the "remittance basis of taxation."

This is applicable to certain non-domiciled individuals who are residents in Ireland for tax purposes but whose permanent home (domicile) is considered to be outside of Ireland.

It is hard to lose your Domically of origin, however, domiciliary is a complex area so if you are unsure about your domicile status in Ireland or have specific questions related to your situation, it is advisable to consult with a financial or tax advisor to get some clarification in this regard.

Under the remittance basis, individuals who meet the criteria can choose to be taxed on the income and gains that are remitted or brought into Ireland, rather than on their worldwide income and gains. This means that income and gains generated outside of Ireland, which are not remitted or brought into the country, may be exempt from Irish taxation which can be very advantageous from a financial planning perspective.

The structure of the investment assets or investment funds that are held outside of Ireland is key as they will be subject to tax at 41% if not structured properly. This tax would also be applied every 8 years regardless of whether the investor crystallized the gains or not.

The above unfavorable scenario can be avoided if the correct portfolio is in place that contains assets, shares, and funds that qualify for ‘’remittance basis of taxation." Opes Financial Planning can establish such investment portfolios.

 

Contact us

Please contact us if you would like to review any investments or pensions which you hold overseas as we can assist you in building an overall financial plan and ensure the structures you have in place are compliant and effective from an Irish Tax point of view.