Retiring to Ireland – Key things to consider

Recent global political developments have increased interest in retiring to Europe – and specifically to Ireland. We will take a look at the top things that you should consider or be aware of if you are contemplating retiring to Ireland.

Domicile and residence

Domicile is a concept of general law. It broadly means living in a country with the intention of living there permanently. Domicile is a much more permanent concept than residence. If you are planning to retire to Ireland and have no intention of returning to live in your country of origin, you may be adopting an Irish-domiciled status going forward. However, this must be reviewed, and advice should be sought from a legal advisor.

Irish tax residency is based on the number of days you spend in Ireland (183 days in a year or 280 days over two years). You will become ordinarily tax resident in Ireland in a tax year if you are resident for three consecutive years prior to this.

Visa requirements

In some case you may need to apply for a visa to reside in Ireland.

In certain cases, and depending on the type of visa application, you may be required to prove that you can support yourself financially. Broadly speaking, this is proven by the preparation of an income and expenditure account for the preceding 12 months, and a review of bank statements as well as any other asset account summaries. We are available to assist in this process as this must be certified by an Irish accountancy firm.

We recommend obtaining separate assistance from a legal firm while pursuing the visa application.

Selling your property abroad

If you decide to move to Ireland, you will most likely be disposing of your principal residence abroad.

Your exposure to tax will depend on whether you are domiciled in Ireland or not. More information about the exposure as an Irish-domiciled individual returning to Ireland can be found here.

If you are not Irish-domiciled and you sell your property, we recommend doing so prior to taking up Irish residency and that the funds are kept in a separate bank account in order to avail of the remittance basis of taxation. Non-Irish-domiciled individuals who are Irish tax-resident in the year of assessment will be liable to Irish income tax on Irish-source income, and on foreign income and gains to the extent that these funds are remitted to Ireland.

Other capital gains tax implications to consider

Aside from your property, you may have other assets including cash reserves that you intend on bringing to Ireland when retiring. It is important to be aware that exchange rate fluctuations may give rise to a capital gains tax liability where there has been a gain realised on exchange of these cash reserves. We are available to assist in the tax planning opportunities to be considered to aid in minimising this exposure.

Purchasing a property in Ireland

When the time comes to purchase a property in Ireland, or find rental accommodation, there are multiple factors to consider, including the relevant taxes associated with property acquisition and potential reliefs available. More information about these considerations can be found here.

Taxation of investment income and foreign pensions

Investment income received in Ireland will be taxable in full in the year you become resident. As discussed above, your domicile status will also have an impact on the tax treatment, as the remittance basis may also be applicable to income that is not received in or remitted to Ireland where your domicile status does not change.

Income from foreign pensions may also be taxable in Ireland. The Double Taxation Agreement (DTA) with your home country will need to be reviewed to ascertain whether the pension is taxable in your home state or in Ireland.

If you have any questions about retiring to Ireland or any other personal tax issues, please contact a member of our tax team.