Query: I'd like to find out what my income tax liabilities would be should I begin to work from home in Ireland for my UK employer. Since the beginning of lockdown, I have been working at home in Ireland.
I have a full-time, permanent recession-proof job in a large UK organisation, where I pay income tax, which is deducted by my employer. I also file a self-assessment tax return in the UK each year because I earn sterling income from a UK flat which I own and have let out.
I had been living in the UK until lockdown but I am enjoying working from home in Ireland now and have always wanted to return to Ireland to live. Now that I know it is doable, I plan to apply to my employer to become a full-time home-worker - and believe I have a fair chance of being accepted. Should my application be successful, I would need to spend no more than four days a month in the UK - therefore I would be spending much more than six months of the year in Ireland.
My employer pays me in sterling and as my employer does not have an office in the Republic of Ireland - or any dealings in the Republic - that will continue. Therefore I would have to look after any tax matters myself. What would my income tax liabilities be if I become a full-time home-worker based in Ireland, how would I go about managing those liabilities - and is there anything I need to be careful about from a tax perspective if setting up as a full-time home worker in Ireland after having previously worked and lived in the UK? Also, would I continue to file the self-assessment tax return in the UK for the rental income earned? Georgina, Co Cork
Answer: Tax on cross-border activities is notoriously complicated. Firstly, as regards the UK, you will be spending more than 30 days a year there so, depending on any other links you have with the UK, such as family and accommodation, you could continue to be UK tax resident under the detailed rules in UK tax law. You will need to check this.
For simplicity, I will assume you have no other links to the UK and will become non-UK tax resident. In that case, you are correct that you would still have to file UK tax returns to pay UK tax on the UK rental income - even for years when you are not UK tax resident.
As regards tax on your salary, you will need to complete a form P85 when leaving the UK and ask the UK tax authorities to allow your employer to cease deducting PAYE. However, for the days that you are working in the UK, that part of your salary will continue to be subject to UK tax and PAYE. You can reduce the Irish tax you pay by getting a credit for this UK tax.
As regards Irish tax, you will need to register through the Revenue Online System (ros.ie), and file and pay through the self-assessment regime. You will need to file an income tax return every year (starting with 2020, assuming you get the permission to stay working in Ireland now) and pay Irish income tax on the various specified due dates. Irish tax will also apply to your UK rental income, but you can reduce the Irish tax by a credit for the UK tax paid on the same income.
One further complication is that you will be subject to Irish PRSI, and your UK employer will need to register in Ireland to pay this.
Tax on offshore retirement fund
Query: In 2013, when I was working in the Middle East, I took the opportunity to convert my UK pension fund into a Qualifying Recognised Overseas Pension Scheme and moved the fund offshore to a retirement benefit scheme in Gibraltar.
In 2017, I moved back to Ireland and the fund continues to be managed by a financial manager based in Dubai. Since moving the fund offshore, I have not paid any funds into it. The fund now has a value around €250,000. My question is: What are the tax implications for me if I move this fund back to Ireland or start to withdraw monies from the fund? I am 58 years of age. Ray, Dublin
Answer: I assume you built up this pension fund when resident and working outside Ireland. If you can cash in the fund now and take the €250,000 back to Ireland, it should not be subject to Irish tax. This assumes that what you receive is, from a legal point of view, a sum in commutation of the foreign pension you would otherwise have got.
The Revenue authority has confirmed that where such a sum is received by an individual who comes to reside in Ireland following their retirement, there is no tax. This should be true even if you have not actually retired.
Tax on Isle of Man profits
Query: I have been trading foreign exchange for the last seven years. I now feel I could trade professionally for a proprietary trading firm in England. If this happens, the account traded would be in US dollars. I would receive 50pc of the profits generated. I plan to set up an Isle of Man limited company to hold the profits. If I am trading from here, is this legal or tax evasion - or is it tax avoidance that is legal? I imagine any income from this company would be taxable in this State. John, Co Wexford
Answer: You are correct in that the profits of your Isle of Man company would be taxable in Ireland. It's clear that you would be running the company from Ireland, so it would be considered to be an Irish tax-resident company - and subject to the usual Irish tax rules for companies.
For trading profits, the tax rate is 12.5pc. If you take money out of the company by dividends or salary for yourself, you are subject to income tax at the usual rates for individuals - and including PRSI, the Universal Social Charge and so on. Bearing all that in mind, it's not clear that there is any advantage from your company being incorporated in the Isle of Man as opposed to Ireland. However, there may be other non-tax related implications as there are differences in company law and other rules between the two jurisdictions.
The other thing to watch is whether your company could be subject to UK tax. If you are sharing profits with the UK company, that most likely constitutes a partnership - and if the main resources of this business are in the UK, it may be subject to UK tax at the country's corporation tax rate of 19pc.
You will need to get specialist advice and discuss it with the UK proprietary trading firm. If the profits of the partnership are subject to UK tax, you can get a credit for the UK tax to reduce the Irish tax to nil - but you can't get a refund of the excess of the UK tax over the Irish tax.
Sunday Indo Business