How does your domicile impact your financial plan?
Before I moved to Ireland in 2008, I had a financial planning client – we’ll call him Jeff. Even though Jeff was only about 30 years old at that stage, he had already built up a successful business, which presented us with some great opportunities for innovative financial planning solutions.
When I moved to Ireland and passed my UK clients to a trusted peer, Jeff was one of those clients that I was really sorry to be unable to advise going forwards. He was always a joy to work with. And then late last year, Jeff rang me out of the blue.
He sold his business a few years ago for quite a tidy sum and is moving to Ireland later this year for family reasons – assuming all goes well with the current Covid-19 restrictions. He was ringing me to rekindle our relationship and advise him now on a few financial planning matters.
While I was delighted with this, I was even happier that he contacted me well before his move. This gave us an opportunity to develop a personal financial strategy to take account of assets he has in UK, as well as assets he will likely accumulate in Ireland.
The starting point of our discussion was a simple question; “Where will Jeff call home?” This might seem innocuous and just making conversation, but in fact it is a crucial question when it comes to financial planning. Where you call home and where your assets are situated can have a significant impact on your wealth or that of your eventual beneficiaries on death. This question of your country of domicile needs very careful consideration.
Domicile is a complex legal concept that is determined by reference to a person’s intention to permanently or indefinitely reside in a country together with their physical presence in that jurisdiction.
There is therefore a significant element of subjectivity, based on a person’s intentions. However, objective proof is sought in situations of doubt. There are a number of factors which may assist in determining domicile, including:
- Place of Birth
- Domicile of Parents
- Marital Status of Parents
- Declaration of domicile (for example statements in a will)
- Property owned by the taxpayer, and accommodation occupied by him or her on a regular basis.
- What business connections does the taxpayer have with Ireland, or another territory?
- How often does the taxpayer visit?
- Where do the taxpayer’s spouse and any children reside?
- How much time has the taxpayer spent in Ireland during the past 10 years?
A person may only have one domicile at any one time, although a domicile of origin can be displaced by a domicile of choice. An individual will always be domiciled somewhere, even though it may be unclear exactly where that is.
There is no statutory test or definition of domicile, and it is purely a common law concept. An additional complication is the fact that the issue of domicile is not determined on universal rules. An Irish Court will determine a person’s domicile according to Irish law, while an English Court will determine the same issue based on English law. The result may not always be the same!
So, it is all quite subjective and arguable. However as there are different tax environments, legal structures and other factors at play in different countries, it is so important to carefully consider your elected place of domicile.
Have you decided where you will be domiciled when moving to Ireland? Global Wealth assists and guides individuals in making wise financial decisions when moving to Ireland.