Taxation of UK Individuals domiciled in Ireland

A significant number of individuals relocate from the UK to the Republic of Ireland (‘Ireland’ hereafter), a trend likely to be emphasised as a result of the recent dramatic overhaul of the remittance basis of taxation in the UK. The purpose of this article is to provide a practical guide to some key aspects of the Income Tax treatment of UKdomiciled individuals who are resident for tax purposes in the Republic of Ireland (‘NonDomiciliaries’ hereafter). The focus will be on the tax implications arising in both Ireland and the UK in relation to three common sources of UK income, namely employment earnings, rental income and dividends.

Space does not permit coverage of the various tax planning opportunities and the intricate anti-avoidance rules which pertain to the use of offshore companies and offshore settlements by Non-Domiciliaries. Similarly, the use of service companies by NonDomiciliaries to avoid potential UK taxation on employment earnings is not covered here, but advisers should be aware that in such cases the Personal Service Company (IR35) and the Managed Service Company AntiAvoidance rules in the UK (Chapter 8 and Section 61B of ITEPA 2003 respectively) will require very careful consideration. Finally, it should not be overlooked that domicile status also has significant implications in both jurisdictions for the purposes of Capital Gains Tax and Inheritance / Gift Taxes.

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