The Remittance Basis of Tax

The "remittance basis of taxation" in Ireland is a tax treatment that applies to individuals who are tax resident in Ireland but not Irish domiciled. Here's a breakdown:  

Core Concept:

• Essentially, it means that these individuals are only subject to tax in Ireland on income/gains they earn from Irish sources and foreign income/gains that they bring ("remit") into Ireland.  
• Crucially, foreign income and gains that are not brought into Ireland are generally not subject to Irish income tax.

Key Implications:

• Tax on Remitted Funds: If a non-domiciled individual has income or gains from sources outside Ireland, they only pay Irish tax on the portion of that income or those gains that they transfer into Ireland.  
• Tax-Free Foreign Income: Any foreign income or gains that remain outside of Ireland are, in general, not taxed in Ireland.
• Benefits: This can be a significant tax advantage for individuals with substantial income or assets outside of Ireland.

Important Considerations:

• Domicile vs. Residence: It's vital to remember that this applies to those who are tax resident but not domiciled in Ireland. These are distinct legal concepts.  
• Mixed Fund Bank Accounts: We recommend that you do not lodge your foreign income and your Irish income to the same bank account as this could lead to complications in terms of determining whether you have remitted the foreign income to Ireland
• Foreign Income Earned Prior to Arrival in Ireland: This income can be remitted to Ireland without being subject to tax. This may be necessary to fund your Irish expenses until you are in receipt of Irish income. The remittance basis of tax only applies to foreign income earned after your arrival to Ireland.
• Rules and Complexity: Tax law is complex, and there are specific rules and potential pitfalls. It's always advisable to seek professional tax advice.

In simpler terms, the remittance basis allows certain individuals living in Ireland to only pay Irish tax on the foreign earnings that are brought into the country.