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Case Study: Irish Resident and non-domiciled planning Thumbnail

Case Study: Irish Resident and non-domiciled planning


Graham and Mary moved to Ireland from the UK in the summer of 2019.

We met with them and explained that there was some important planning that they should have undertaken before moving to Ireland. Fortunately they had not been in the country for enough days to trigger Irish residency for tax purposes so we asked them to move back to the UK for a few days over the end of the tax year. 

This allowed them to sell everything that they had in the UK without incurring any Irish tax, which if they had been Irish tax resident would have meant a 41% tax charge.

They moved back to Ireland but left their investment portfolio "offshore" i.e outside of the Republic of Ireland.

As they are now Irish resident they are subject to Irish tax on their Irish source income but since they are non-domiciled they only have to pay tax on income or gains that are remitted into Ireland. See our guide here



Their children all live overseas and their investment portfolio is being used to subsidise the cost of training and college fees.

We therefore designed a bespoke investment portfolio which would ensure that they could maximise the opportunity to support their children in a tax effective way since any payments from the account will not be remitted to Ireland.

They invested just under €1.2M at the end of January 2020 and their portfolio compared to the MSCI All Country World Index is shown below

The practical effect of this planning is that the gain on the portfolio of €137,443 in 2020 is not subject to Irish Capital Gains tax at a rate of 33% (tax year 2020) and the dividend income of around €30,000 has not been subject to Irish Income tax at a rate of up to 52% including PRSI and USC.

A longer term analysis of our offshore remittance planning portfolio compared to the FTSE All World Index 

We think that's worth our 1%pa  fee.

Finally, as Graham and Mary are not Irish Resident for 5 consecutive tax years, any gifts that they make to the children will be exempt from Irish Capital Acquisitions Tax.

For more information on relocating to Ireland please see our guide here  


or to book an appointment to discuss further, please use this link 



Important 

This is an unregulated activity as the Central Bank of Ireland does not regulate Financial Planning or Tax planning