Irish Expats Returning to Ireland – Have you tax planned your move?

After surviving an unprecedented period during the pandemic, the number of ex pats considering a return to Ireland seems to be further accelerating for a number of reasons - primarily to be closer to family and also for other reasons including the relatively affordable cost of private healthcare in Ireland (which is a topical matter particularly for those clients currently living in the US) and for educational reasons. We understand that the Department of Foreign Affairs is receiving an unprecedented number of enquiries from Irish nationals seeking to repatriate since the onset of the pandemic.

Whilst personal taxation may not be a reason for returning to Ireland, it is vitally important that the ex-pat’s financial affairs are managed in a way that the move to Ireland is tax efficient, particularly if they are currently living in a tax jurisdiction with low personal income tax and capital gains tax rates. As an Irish domiciled and tax resident individual is taxed in Ireland on worldwide income and gains (including uncrystallised gains which accrued whilst they were abroad), there are many relevant tax matters which should be considered prior to moving back to Ireland.

On the ground, some of the practical matters affecting our clients moving back to Ireland include:

• The timing of the move – to potentially ensure that they do not become Irish tax resident in the year of arrival.
• Selling of their foreign home – does capital gains tax principal private residence tax relief apply and the timing of the sale.
• Selling foreign assets before the return to Ireland – an Irish CGT liability could potentially arise on gains which are not crystallised prior to becoming Irish tax resident.
• Does their current investment strategy work from an Irish tax perspective?
• Will the individual continue to work for the same employer once they return to Ireland – the foreign employer may not be aware of the Irish payroll tax obligations.
• Are there issues with share schemes – we are seeing an increase in cross jurisdictional complications regarding the exercise of share options.
• How are bonuses taxed when they are earned prior to moving to Ireland but received when Irish tax resident?
• Inheritance tax issues – do they now need to put an Irish Will in place.
• Foreign pensions – if the individual is retired or close to retirement how will their offshore pension be taxed in Ireland once they are Irish tax resident.
• Is their spouse Irish domiciled – if not, is there scope for the spouse to claim the favourable remittance basis of taxation.

If you are considering a move back to Ireland, it is vital that you obtain Irish tax advice in the year before you become Irish tax resident. Please contact our team who have considerable expertise in this area.