Tuesday 24 April 2018

Can I be non-tax resident in three countries when I retire?

Tax residency is a complex matter
Tax residency is a complex matter

Conail Flynn

I am retiring shortly and planning to spend some time in my holiday homes in two different countries - as well as in Ireland. At present, it looks like I will not exceed the residency limit in any one country. Can I remain non-resident in all three places? Brian, Ashbourne, Co Meath

Tax residency is a complex matter. If your presence in each country was evenly distributed at, say, 122 days in each jurisdiction, you would be below the "residency limit" which is widely accepted as being 183 days in any year.

Unfortunately, matters are not quite that straightforward.

In order to be tax resident in any jurisdiction, the domestic legislation governing tax residency in that country would need to be considered.

You have not indicated the countries in which your two holiday homes are located, so I can only address the Irish rules here.

An individual will be considered to be Irish tax resident if they are present for 183 days or more in Ireland in a tax year - or an aggregate of 280 days or more in Ireland in the current tax year and the previous tax year combined.

If an individual is present for 30 days or less in Ireland in a tax year, they will be regarded as a non-Irish tax resident and the 280 day rule will not apply in those circumstances.

In addition to residence, an individual may also be "ordinarily resident" in Ireland, which will affect their exposure to Irish tax.

You would need to consider the residence rules in the jurisdictions in which your holiday homes are located. In addition to the common 183-day threshold, many countries have a further test based on available accommodation. What this means is that, where an individual has accommodation available in that country, they may be considered tax resident there under the domestic legislation, regardless of the number of days' presence.

On that basis, it is possible for you to be regarded as tax resident in all three locations under the domestic legislation governing tax residency.

If that were the case, you should consider the provisions of any double taxation agreements between the relevant jurisdictions to determine which country would have priority in applying its legislation to tax you.


I have over 41 years' service in the HSE and have no immediate plans to retire. My pension will be based on 40 years' service but superannuation continues to be deducted from my salary - is this right?

Orla, Beaumont, Dublin 9

Unfortunately, this is correct. As per the terms of the scheme, you must continue to make pension contributions to the main scheme, even if the service is not reckonable for pension purposes.

The reason for this is that final superannuation benefits are not based on the salary on attaining 40 years' reckonable service, but the actual salary at the date of retirement. This will account for any increases in salary from the 40-year point up to the date of retirement.

However, contributions to the Spouses' and Children's scheme are limited to 40 years, so it should be possible to get a refund of the excess contributions paid. These contributions should be refunded from the contributions paid at the outset on joining the scheme, and not the contributions paid post year 40.


When I recently passed the age of 65, my employer put me on a rolling one-year contract and ceased contributing to my pension fund. I continue to contribute myself. As I would expect to be retiring in the near future, how best can I arrange my pension so that I have control of the maximum amount? My fund is presently about €120,000 and is a company defined contribution fund. Also, would it be possible for me to now take the tax-free amount allowable and delay the arrangements for the balance until I am due to retire?

George, Birr, Co Offaly

Under an occupational pension scheme, at the point of retirement you cannot defer taking the balance of your pension fund after taking a tax-free lump sum. Your retirement options are: you can take 25pc of the fund as a tax-free lump sum and with the balance, purchase an income (annuity) for life and/or invest in an Approved Retirement Fund (ARF).

The ARF and taxable lump sum are subject to certain criteria at time of draw-down. You must either have guaranteed pension income of €12,700 per annum or invest €63,500 in an Approved Minimum Retirement Fund (AMRF).

ARFs and AMRFs are funds into which you can reinvest the proceeds of your pension fund. They have three main advantages: one, you keep control over your fund; two, you can access your money when you need it; and three, on death, the ARF balance passes to your estate tax-efficiently.

On the downside, if you withdraw more income than the fund grows each year, the fund could run out before you die. The fund value could also fall or rise, depending on investment market conditions,

The income for life (annuity) option offers you certainty until your death. However, once an annuity is purchased, it cannot be changed and, unless you purchase a spouse's annuity, in the event of your death the annuity would cease. As annuity rates are interest-rate sensitive, they do not currently represent good value for money.

It is also possible to avail of a higher tax-free lump sum based on salary and completed service (up to one-and-a-half times your final salary if you complete at least 20 years' company service).

Conail Flynn is a director with Grant Thornton

Email your questions to jcradden@independent.ie or write to 'Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1'.

While we will endeavour to place your questions with the most appropriate expert to answer your query, this column is a reader service and is not intended to replace professional advice.

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