Expatriates taking up employment in Ireland will be subject to very specific tax and social security rules.
Tax compliance and reporting obligations for companies and individuals have increased in recent years but significant tax savings can also be generated for expatriates arriving to Ireland where tax planning is undertaken.
Grant Thornton Ireland’s Global Mobility Services team has extensive technical expertise to take on the most complex and specialist work, while remaining flexible and responsive to expatriates’ everyday needs.
In particular Grant Thornton Ireland, a member firm of Grant Thornton International Ltd, can support expatriates and their employers to identify strategic assignment planning structuring opportunities, develop assignment policies; as well as providing social security planning and compliance services regarding Irish tax filing and payroll requirements.
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Non-Irish nationals will need to register for a Personal Public Service (PPS) number. The PPS number is an individual identification number for tax and social security purposes.
Once a PPS number is received, personal tax registration should be undertaken with the Irish Revenue Commissioners and will be required for the allocation of tax credits/tax bands.
Most Irish national employees working in Ireland pay their tax through payroll withholding and are not required to file a tax return. This assumes employment income is the only source of income and this is taxed in full via payroll. However, foreign nationals on assignment to Ireland may have a more complicated tax position and may be required to file an Irish tax return even if their taxes are being paid by their employer.
Personal tax returns should be filed by 31 October following the end of the tax year concerned.
The Irish tax year runs from 1 January to 31 December.
Income rates for 2022
|Marital Status||Taxable Income (€)||Rate of income tax|
|Single||0 – 36,800||20%|
|Married couple with one Income source||0-45,800||20%|
|Married couple with two income sources||0-45,800 with max increase of 27,800||20%|
The USC is a tax payable on gross income, including notional pay. All individuals are liable to pay the USC if their gross income exceeds €13,000 per annum. The USC will be collected through payroll in most cases. The standard rates of USC are:
- €0 - €12,012 @ 0.5%
- €12,012.01 - €21,295 @ 2%
- €21,295.01 - €70,044 @ 4.5%
- €70,044.01+ @ 8%
In addition, there is a USC surcharge of 3% if an individual’s non-employment income is more than €100,000 a year. The 3% is levied on the non-employment income above €100,000.
Where the individual is not tax resident in Ireland, only the single person’s standard rate band is available (aggregation relief may apply).
A married individual will be treated as a single person for Irish tax purposes where their spouse remains in their home country and continues to earn their own income.
Personal tax deductions, based on personal tax circumstances, apply to Irish tax residents.
Sample income tax calculation for year ending 31 December 2022.
|Less allowances, reliefs and deductions|
|Tax at||36,800 @ 20%||7,360|
|68,325 @ 40%||27,330|
|Less: credits and reliefs|
|Add: Universal Social Charge||12,012 @ 0.5%||60|
|9,283 @ 2%||186|
|48,749 @ 4.5%||2,194|
|39,156 @ 8%||3,132|
|PRSI||109,200 @ 4%||4,368|
|Total income tax USC & PRSI||41,330|
A charge to Irish tax is dependent on whether the income arises in Ireland and the extent of the charge will be determined by an individual’s tax residency status and domicile position.
Exposure to Irish tax will be determined by the expatriate’s residence, ordinary residence and domicile status.
Tax residence in Ireland is determined by the expatriate’s actual presence within a tax year. The expatriate will be treated as an Irish tax resident where:
- they spend 183 days or more in Ireland in any tax year, or
- they spend an aggregate of 280 days or more in Ireland over the course of two tax years where they will establish residence in the latter year (with a minimum of 30 days in each tax year).
The term ordinary residence is distinct from residence and refers to an individual’s pattern of residence over a number of years.
As mentioned above the concept of tax residence is considered in conjunction with the concept of domicile. The test for domicile is complex and based on substantial case law. Everyone is born with a domicile of origin which is normally the domicile of their father. Domicile has more of a permanent meaning than residence.
An Irish tax charge arises on employment income derived from duties performed in Ireland. Assessable employment income includes all wages, salaries, overtime pay, bonuses, gratuities, perquisites, and benefits etc. There is also a requirement on the expatriate’s employer to deduct Irish payroll withholding tax from the assessable employment income.
As mentioned above, where duties are performed in Ireland, any remuneration received in respect of these duties is treated as Irish source income and subject to Irish income tax regardless of the expatriate’s tax residence status (subject to the relevant double taxation agreement).
In general, where the benefit is enjoyed in Ireland, an Irish income tax charge will arise. Subject to the expatriate concessions set out below, housing, meal allowances, provision of a car and will come within the charge to Irish income tax in addition to the individual’s salary.
The domicile levy is an annual tax charge of up to a maximum of €200,000 and applies to individuals who are:
- Irish domiciled
- Worldwide income for that year exceeds €1,000,000
- Liability to Irish income tax is less than €200,000
- Irish located property is greater than €5,000,000.
Where income has been subject to double taxation, in Ireland and a foreign jurisdiction, relief can be claimed where provided for in the relevant double taxation agreement. The USC may also be relieved under the double tax agreement.
Accommodation and subsistence
An individual who is seconded to Ireland for a period of not greater than 2 years, may be able to receive tax free accommodation and subsistence, subject to certain conditions, for the first 12 months of an assignment.
Where an employer pays or reimburses an employee for removal and/or relocation costs it may not give rise to a taxable benefit where the amounts are reasonable, paid in respect of expenses actually incurred and where moving is necessary.
Special Assignee Relief Programme (SARP)
This relief applies to individuals arriving to work in Ireland between 2012 and 2022, including individuals returning to Ireland who have been non-Irish tax resident the previous five tax years prior to arrival.
Where certain conditions are satisfied, 30% of taxable employment income over €75,000 and up to €1,000,000 will be disregarded for income tax purposes. Income which is disregarded for income tax purposes is not exempt from the USC or PRSI. An employer must file a Form SARP 1A for each employee availing of SARP relief. The form must be submitted to Revenue within 90 days of the employee’s arrival in the State.
Research and Development (R&D) tax credit
This relief applies to key R&D employees. Where certain conditions are satisfied, the relief allows a company to transfer a portion of its R&D tax credit against key employees’ income tax (subject to the credit not reducing the employees’ effective tax rate below 23%).
Deductions against income
Certain expenses can be provided by an employer free of income tax where they qualify as wholly, exclusively and necessarily incurred in the performance of the employment duties, including certain remote working expenses.
Contributions to an Irish Revenue approved pension scheme (or certain foreign pension schemes) are deductible for income tax purposes– subject to specified limits.
This is a tax on gains arising on the disposal of assets. The remittance basis of assessment may apply to the proceeds of foreign gains (ie non Irish gains which are brought into Ireland), depending on an individual’s residency and domicile status.
The current CGT rate is 33%.
A liability to Irish inheritance and gift tax (capital acquisitions tax, CAT) depends on the individual’s Irish tax residence and domicile position.
There is usually a requirement for a non-Irish domiciled individual to have resided in Ireland for a certain period before a charge to Irish CAT arises.
Where the asset concerned is considered to be an Irish asset, a charge to Irish CAT will arise. The current CAT rate is 33%.
The expatriate’s Irish tax residency and domicile status will determine whether investment income such as interest, dividends etc., will become liable to Irish income tax.
There are no local taxes applied to an individual in Ireland.
The Local Property Tax (LPT)
Local Property Tax is an annual self-assessed tax charged on the market value of all residential properties in Ireland. The annual LPT charge basic rate depends on the valuation band of your residential property and ranges from €90 to €2,721 for valuations up to €1.75 million and a percentage formula for valuations thereafter (subject to Local Authority adjustment factors).
An individual is considered a liable person for LPT in a tax year if they own a residential property on the liability date – 1 November in the preceding year. For 2022, the liability date is 1 November 2021 and the payment date is 10 January 2022 if paying the full amount due in one instalment.
Stamp duty is the tax that functions as a real estate tax in Ireland. Stamp duty is applicable to any written document because the sale of real property must be in writing, stamp duty always applies to transfers of real property.
Stamp duty is levied on the consideration passing for the transfer of the land.
The rate of stamp duty applied depends on the level of consideration passing. For residential property, the first €1,000,000 is taxed at 1% and consideration over €1,000,000 is taxed at 2%.
For non-residential property the rate of Stamp duty is 7.5% (from 9 October 2019).
Where work is performed in Ireland, generally a charge to Irish social security (PRSI) will arise. The expatiate will be treated as an employee and will be subject to PRSI at 4% on gross employment earnings. The employer will also be required to contribute 11.05% of the relevant income and benefits to Irish PRSI. PRSI must be collected at source along with payroll taxes.
Where the expatriate is transferring from an EU jurisdiction, and holds the relevant documentation, an exemption to Irish PRSI will apply (subject to the relevant time limits).
Where the expatriate is transferring from a jurisdiction outside the EU with which Ireland holds a bi-lateral agreement and the expatriate holds the relevant documentation; an exemption to Irish PRSI will apply (subject to the relevant time limits).
Where the expatriate is transferring from a jurisdiction that does not fall into one of the above categories, the Irish rules will determine their liability.
A charge to tax generally arises on the exercise of stock options based on an individual’s Irish workdays over the vesting period. This is on the basis that the gain arising on the exercise of the stock options is also chargeable to tax in a country with which Ireland has a Double Tax Agreement.
The tax liability (including the USC and employee PRSI) must be paid to the Irish Revenue within 30 days of exercise accompanied with a form RTS01.
In a situation where the gain is chargeable to tax in a country with which Ireland does not have a Double Agreement, then different considerations apply.
Individuals who exercise share options are chargeable persons and therefore must submit a self-assessment tax return to Revenue by 31 October following the year in which the options are exercised.
All share awards which are subject to income tax, with the exception of share options, are now subject to the PAYE withholding regime.
There is no wealth tax in Ireland.
There are no other specific taxes relating to expatriates in Ireland.
With the correct planning, non-Irish domiciled individuals who are tax resident in Ireland can minimise their worldwide tax charge.
Individuals who are Irish resident but domiciled outside of Ireland are only taxable in Ireland in respect of foreign income and foreign gains to the extent that they are remitted into Ireland. This can give rise to tax minimisation strategies for non-domiciled individuals who become Irish tax resident.
Grant Thornton Ireland’s expatriate tax team can advise expatriates structure their global tax affairs to minimise their worldwide tax charge.