Relocating to Ireland: Tax Considerations You Need to Know Before You Go

Apr 1, 2025
7 min read

So, you’re thinking of moving to the Emerald Isle? Whether for work, lifestyle, or retirement, it’s essential to understand the tax implications of becoming an Irish resident. Ireland offers a favourable tax environment, but navigating the rules on tax residency, income, and gains requires a closer look. So, before you pack your bags, it’s essential to understand how your move will impact your wallet. Here’s a rundown of what you need to know.

Understanding Irish Tax Residence

The first step in understanding your tax obligations in Ireland is determining your tax residency status. You’re considered a tax resident in Ireland if:

You spend 183 days in Ireland during the tax year, or
You spend an aggregate of 280 days in Ireland over two consecutive tax years, with at least 30 days in the second year.

It is important to note that for tax purposes, an individual is considered present in Ireland if they are physically in the country for any part of the day.

Pro tip: If you move to Ireland partway through a tax year and end up staying for 183 days, you will be treated as an Irish tax resident for that year - meaning you’re liable for Irish tax on worldwide income and gains from 1 January, and not from the day you arrive.

Ordinary Residence – What Does It Mean for You?

Becoming a tax resident is one thing, but you may also become an "ordinary resident" in Ireland for tax purposes. You become an ordinary resident in Ireland for a tax year after you have been resident in Ireland. Similarly, tax residence ceases at the end of the third consecutive year in which an individual is not tax resident for three consecutive tax years. The concept of "ordinary residence" is key when it comes to your income and capital gains tax liabilities after you cease being a tax resident.

The distinction between residency and ordinary residency can affect your long-term tax planning, so it is important to keep track of your status.

What About Domicile?

Now, here’s where things get a little more complicated - domicile is another essential piece of the puzzle in determining your exposure to Irish tax. While there is no statutory definition of domicile, it is a legal concept and generally refers to your "natural home." An individual is usually born with a domicile of origin, typically that of their father. If a child is born outside marriage or after the death of his or her father, the child takes the domicile of his or her mother.

It is possible for a person to lose their domicile of origin and acquire a domicile of choice, such as when someone moves to Ireland permanently and intends to make it their home. However, this is not an easy process. Likewise, it is possible for an individual to lose their domicile of choice and revive their domicile of origin.

Unlike residency, which can change relatively easily, changing your domicile requires a clear intention to reside permanently in a different country.

Why does domicile matter? Domicile is an important concept under Irish law as it is relevant not only for tax purposes but also for determining the rules of succession. For example, if you are domiciled in Ireland, your worldwide assets will be subject to Irish inheritance tax. So, this is one to pay attention to if you plan on passing on any treasures!

Funds prior to becoming an Irish tax resident

Funds that are derived from income earned or gains on disposals before 1 January of the year in which an individual becomes an Irish tax resident is regarded as a remittance of capital and therefore should not be subject to Irish income tax or capital gains tax. This applies provided the income or gains were earned or realised when the individual was not resident and not ordinarily resident in Ireland.

It is worth noting however, that if the funds are denominated in a foreign currency and are later converted to euros, a foreign exchange gain could theoretically arise, which may be considered a chargeable gain for Irish tax purposes.

The scope of an individual’s liability to income tax in Ireland can be summarised as follows:

The scope of an individual’s liability to Capital Gains Tax can be summarised as follows:

Understanding the Remittance Basis of Tax in Ireland

This is the fun part (and the one you’ll want to pay special attention to). If you’re planning on relocating to Ireland and you are not domiciled here, you will likely qualify for the remittance basis of tax. This means that you will only pay taxes on foreign income or proceeds from the disposal of foreign assets if you bring the funds into Ireland. Sounds like a good deal, right?

Understanding how it works could save you a significant amount in tax but like any tax rule, it comes with its nuances. Here is everything you need to know.

Remittance 101: How It Works (and How It Can Trip You Up)

Under Ireland’s remittance basis of tax, those who are residents but not domiciled in Ireland will generally be taxed on:

Irish-sourced income: Just like any other Irish tax resident.
Foreign income or gains: This is only taxed if the income or proceeds are remitted (brought) into Ireland.

This means that if you have income from abroad, you don’t necessarily have to pay Irish tax on it unless you bring it into Ireland. If you are keeping your foreign income abroad, you are likely in the clear for Irish tax, at least for now.

For example, if you purchase a holiday home in Spain before moving to Ireland and later sell it, the profits from the sale of that property might only be taxed in Ireland if the proceeds are brought into Ireland.

How Does the Remittance Work?

Remittance doesn’t just apply when foreign income is brought into Ireland. Even if foreign funds come into Ireland via indirect routes, like transferring money to cover Irish living expenses (think: credit card payments or paying rent), those funds count as a remittance and may be subject to Irish tax.

The key takeaway: only remitted foreign income is taxed. A remittance of income earned before 1 January in the year you became tax resident in Ireland should be regarded as a remittance of capital and therefore is not liable to Irish Income tax.

However, the way remittances are treated can get a little tricky when you’re dealing with accounts that hold both capital and income (often referred to as a "mixed fund").

Mixed Fund Accounts and Tax Implications

When remittances come from an account that includes both capital (money that you accumulated before becoming an Irish tax resident) and income (money earned after becoming a tax resident), Irish Revenue will assume the money is coming from the income element first. This could mean that part of your remittance is taxable, even if some of the money is capital you accumulated before your move.

To avoid this, it's highly recommended to keep capital and income in separate foreign bank accounts. This ensures that any money you bring into Ireland from your capital funds is not liable to Irish tax.

How to Make the Remittance Basis Work for You

If you are not Irish-domiciled, before you make the move to Ireland, here are a few steps to take to reduce your exposure to Irish taxation and enjoy the benefits of the remittance basis of the system:

Separate Your Capital from Your Income: Before you become an Irish tax resident, move your capital (i.e., wealth accumulated before moving) into a separate, designated bank account or investment account. This way, you can bring these funds into Ireland free of tax.
Keep Income and Capital in Different Bank Accounts: Arrange for any income paid on the capital account to be credited to a separate bank account so that remittances can be made to Ireland from the capital account free of tax as remittance from mixed accounts will be assumed to be from the income portion first and therefore may be liable to Irish income tax.
Review Your Investments: Some foreign investments might not qualify for the remittance basis of tax. It is worth reviewing your portfolio to make sure your assets are structured in the most tax-efficient way.
Consider methods to finance expenditure in Ireland: By evaluating future income streams and spending demands, the best way to finance spending in Ireland is usually to combine remitting capital (funds accumulated before becoming Irish tax resident) with foreign income (which is taxable if remitted to Ireland but if remitted at a lower level may be covered by personal allowances or taxed as low rates). It is generally preferable to bring in a small amount of income and a small amount of capital each year as opposed to living solely from capital funds for the first few years if the intention is to stay in Ireland for the long term, as the remittance of significant amounts of income in later years once the capital funds have been exhausted, may result in higher income tax liabilities.
Consider Gifting Assets: If you are thinking about gifting foreign assets to family members, doing so before you become an Irish tax resident (or within the first five years) may keep the gift outside the charge to Irish Gift Tax.
Currency Conversion: Don’t forget that exchange rates can affect the value of your remittances.

The Bottom Line: Plan Ahead and Make the Most of the Remittance Basis

Relocating to Ireland and understanding the remittance basis of tax can significantly influence how you manage your foreign income and assets. With proper planning, you can make the most of this tax system by keeping your capital and income separate and remitting foreign funds in the most tax-efficient way possible.

Before you pack your bags and start making plans for your new life in Ireland, it is essential to work with a tax advisor who understands the nuances of the Irish tax system. With the right planning and strategy, you’ll be able to take full advantage of the tax benefits available to you.

Ready to make Ireland your new home? Plan ahead, take the right steps, and let the Irish tax system work in your favour!

DISCLAIMER This article does not constitute professional accounting, tax, legal or any other professional advice. No liability is accepted by Taxkey for any action taken or not taken in reliance on the information set out in this presentation. Professional accounting, tax, legal and / or any other relevant professional advice should be obtained before taking or refraining from any action as a result of the contents of this article.