Tax Planning for Expats in Ireland

Voiceover 1
This is a guest episode of Ask About Wealth, where Stephanie Wickham talks about tax planning for expats with Paul Overy. If you like this episode, you can subscribe at askaboutwealth.ie or check the show notes for more details.

Voiceover 2
Welcome to Taxbytes for Expats, the top tax tips you want to know as an expat. The podcast is here to help answer the common queries and concerns expats have when moving to or from Ireland.
Complex taxes explained simply.Be aware of to ensure you save time, money, and stress.

Stephanie Wickham
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But thanks to Currencies Direct for their support of this podcast.

Paul Overy
Hello, and welcome to the Ask About Wealth podcast. As regular listeners and subscribers and viewers on YouTube know, we alternate these podcasts between me pontificating away at Cameron.
all by myself, and guests. And when we bring in guests, we want these guests to bring with them exactly what we’re set up to do, which is new knowledge and new information for our viewers, for our listeners, that will either be beneficial to you, the listener, yourself, or indeed beneficial to somebody you might know.
Today I’m delighted to welcome Steph Wickham. Steph is a chartered tax advisor and chartered accountant,Of expataxes.ie.
Steph, thanks a lot for coming along today.

Stephanie Wickham
Thank you so much for having me.

Paul Overy
Delighted to have you here. And, you know, while I was telling you before we were recording there that our listeners and viewers are predominantly Irish based, there is a growing number who are overseas and therefore expats, which fits neatly into your world.
And, you know, there is a growing number of people who have no official.To Ireland, coming on our consuls, for example. I mean, in the last week, I did 16 consuls.
Six of them were from people from overseas. So there is a rising interest in exactly what you help people to do.
And tell us what you specialise in, Steph.

Stephanie Wickham
So, tax, Irish tax, is our main focus. I suppose, in terms of the tax heads that we would regularly advise people on, you’re looking at the common tax heads like income tax.
Capital gains, and then obviously capital acquisitions tax, so inheritance and gift tax. We’d have a lot of clients who have questions about, you know, how am I going to be taxed when I come back to Ireland?
Can I transfer money from abroad to Ireland? You know, what do I need to do in advance of my return to be compliant in Ireland and perhaps in another jurisdiction?
So our job really is to kind of take what is essentially complex tax legislation,Irish and an international perspective, and simplify it and apply it for the client so that they can form a plan and get clarity on how they’re going to have to pay taxes once they come back to Ireland.

Paul Overy
Okay. And in terms of the, do you deal exclusively with people either leaving or coming, or do you have regular tax clients who are here forever?

Stephanie Wickham
Exactly. So we would have, I probably say we have three categories of client.Come or recently arrived. We’ve got someone who’s planning to leave or recently departed.
And then the third category would be somebody who has ongoing tax filing obligations with an international slant. So that could look like somebody who maybe moved three to four years ago from abroad to Ireland.
And their tax return in Ireland is not straightforward. It’s complicated by the fact that they have foreign income or foreign gains. Maybe they have a big life event coming up, like an inheritance or the sale of a foreign asset.
They need somebody to guide them through it so that they can navigate it. So, broadly, we would work with those three cohorts. But the common thread is always that there is an international element to their profile. So, they either have lived abroad or are living abroad at some point.

Paul Overy
Very good. And you have some personal experience in this regard, isn’t that right?

Stephanie Wickham
Yeah. So, I suppose what’s quite interesting is we do consultations like you yourself mentioned you do. And it always resonates with me when I talk to clients about how stressful.
It can be to be living away from your place of origin, returning there even can be difficult. We ourselves, my husband and I, lived in Australia for eight years. So I had trained with KPMG in Dublin.
We relocated, worked with KPMG in Australia. And then life happens and we had started a family. And as we were saying before we started to record, there’s this common thread that Irish people feel the pull to come home, that desire to return at some point in their life.
For us, it was when we started a family, and just memories of the logistics of packing up a container, trying to find a rental property in Ireland, and the emotional part of saying goodbye to the friends that you’d made, and then returning to a place where life had gone on as if you had never left in some ways, but in other ways, things had moved forward.
So just reconnecting professionally and kind of in a social setting.It’s difficult. We call it coming home, but it doesn’t always feel like that initially.
And as time passes, then you’ll find that it gets easier. So often we’ll see in forums and with clients that clients are returning expats will have questions about, am I doing the right thing?
And is this going to work out? So we try to bring a sense of that when we advise our clients. In other words, because you’ve been through it yourself.
All of us have actually lived internationally at some point. So that’s not one of the prerequisites to work with us, but it does help that people have a sense of, you know, we’re advising on one aspect through the lens of taxes, but just being cognizant of the fact that this is a big life event for the person that we’re speaking to.

Paul Overy
Absolutely. And before we were recording, you were telling me that’s kind of broadly, you know, leaving Ireland, as in there’s a, I’m sure there’s.People listening to us now who have plans, or if not plans, desires to go overseas.
And then, of course, there’s the audience that are overseas already who want to come back, the expats themselves. And then, of course, there’s the cohort of people that are appearing on my consoles, which are looking to come to Ireland because their granddad was born in Ireland or something, and they may not be as happy as they once were in their current jurisdiction.
You said earlier, let’s focus on leaving Ireland for a minute, and the people who are listening who are either contemplating or planning that.
You said to me that the tax issues depend on where you go, what you’re doing, what assets you leave behind.
Can you put a bit of meat on the bones of that for me?

Stephanie Wickham
Yeah. So I suppose if we go into a consult with a client, one of the ways I kind of open it is.Is to kind of ground the discussion in the non negotiables from a tax perspective.
And when you talk to somebody, you must always be very clear on their residency position, their ordinary residency position, and their tax domicile. Those three are the three main pillars that underpin how Ireland seeks to tax someone.
So when you’re talking to somebody who’s looking to leave, what are they looking for? They’re looking for clarity. What’s going to happen if I’m no longer here? Does Ireland have a right to tax me? And I think for the majority of people,Who are perhaps leaving Ireland to go and take a job abroad, and perhaps they have quite simple financial circumstances such that that is their only source of income.
It’s relatively straightforward. You can be relatively sure that you’re severing your connection with the Irish tax system. Where it gets more complicated and warrants review is when somebody has perhaps been in Ireland for three, four years, at least, perhaps longer, they have assets and they decide to leave Ireland and reside elsewhere.
Tax residency is triggered elsewhere. So the complexity comes from the fact that Ireland has two tax residency concepts. The first being tax residency, which is just a day’s test are you here for a sufficient number of days?
And then a secondary concept, which is called ordinary residency. And this concept essentially is quite far reaching because it keeps you in the Irish tax system for three years after you leave.
And people can get quite concerned about this. So our job as advisors is to work out where they’re going, what their income.Are, what the potential gains are likely to be, and how this ordinary residency charge to taxation is going to impact them.
Because quite interestingly, ordinary residency actually taxes people on a worldwide basis for income and gains, with some limited exceptions. So if you’re talking or thinking about going abroad and you have assets, perhaps it’s US listed shares, an Irish property, a foreign asset, and you’re looking to go to a jurisdiction that we have a treaty.
With or perhaps we don’t, you really should be taking tax advice to understand, you know, what are my obligations to Irish revenue? Now, as we were saying before we started to record, generally speaking, with the right advice and planning, this doesn’t need to be a disaster.
You know, people can get quite worried about this. They think, oh, I don’t want to become an ordinary resident because it’s this, you know, enduring connection with Ireland from a tax perspective. And that doesn’t have to be the case.
But I think it’s really just to kind of highlight the specific.Of where you’re going, how long you’re going for, and what you have really matter. Because we will often find that clients come to us really concerned about a problem, maybe because they’ve done some very good research themselves, and the conversation will take a completely different turn because they haven’t known the right questions to ask.
And then we can guide them as to, we’ll consider this, do or don’t do this, and we can get to a nice conclusion.

Paul Overy
So if I can just feed back to you what I think you’veSaid, and correct me if I’m wrong. So, living and working in Ireland, you’re either resident or ordinarily resident.
And that depends on the time you’ve been in Ireland in that sense. So, for a lot of people listening, they were born, bred, and buttered in Ireland. So, they’ve been here forever.
So, they are ordinary resident by your definition because they’ve been here forever. Anybody who comes to Ireland who stays here for three years.
Are longer is automatically ordinary resident, you were saying. Resident before the three years and ordinarily resident afterwards.
And then the ordinary resident person has at least the potential to be in the crosshairs of Irish revenue for a period of time, even after they’ve got on the boat and left the country.
Yeah. So would it be right to say that somebody?Could be, you know, a teacher could be going to Dubai tomorrow and live there for three years and have a zero tax on their salary in Dubai, but owe the Irish revenue money when they come home.

Stephanie Wickham
Yeah, really good question and a really common concern. That specific case you gave, no, it’s highly unlikely that there’s any issue there. The first reason is because, broadly speaking, the employment income is outside the charge to tax, even if they remain orOrdinarily resident in Ireland.
So, the specific legislation and reliefs that are designed to prevent Ireland taxing employment income after you’ve left. And that’s a concern. And then a follow on question, you know, when you’re talking to that client is, you know, I’m earning a good salary and I’d like to bring it back with me to Ireland to buy a house.
So, we navigate that with them and give them the comfort in many cases that that is not taxable if they bring it back. So, that’s something that people need to understand.

Paul Overy
So, they’re there in Dubai, they save a load of money when they’re there.They can confidently bring that money home and not expect the Irish revenue to be dipping their hand in their pocket.

Stephanie Wickham
Yeah, in most cases.

Paul Overy
And I think what’s. Sorry to cut across you, Steph, but in what circumstances should they not be confident?

Stephanie Wickham
So perhaps Dubai wouldn’t be a scenario where we’d see it too often, but you would sometimes have people presume, and we hear it frequently, that they would perhaps live or be tax resident in the UK, for example, but come to Ireland.
And work here for the summer, let’s say, or for four months of the year, three months of the year. So, not a sufficient amount of time to become a resident, but a sufficient amount of time that consideration needs to be given to the fact that they have an Irish source of income.
So, this is an important point. When somebody’s physically doing work in Ireland, whether it’s because they have their own business or they’re an employee of a foreign entity, the income that they earn is considered to be Irish sourced.
So, if, for example, we take the teacher,And they were coming back, and maybe they were doing some online grinds or something from Ireland for three or four months. Consideration would need to be given to the fact that there could be an Irish tax charge in some circumstances.
Why? Because the source of the income becomes Irish when the work is physically done here. And this is when we need to kind of go into a little bit more depth with the client. So a common misnomer is well, I’m not tax resident, so I don’t have a tax liability.
That’s not necessarily how it works.Isn’t one of the income sources that we get too concerned about when it’s nice and black and white, like you said.
You go abroad, you work, you earn your income there. There’s a split year relief provided for in the Tax Acts that releases you from an Irish tax charge.

Paul Overy
Okay, okay.

Voiceover 2
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Stephanie Wickham
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Paul Overy
When leaving, then, in terms of, and I mean, let’s talk about, you know, both people who are just leaving for a new job, let’s say, with little or no wealth built up in Ireland at that time.
Or indeed people with a load of wealth built up in Ireland who might be leaving because they want to dip their hand in those cookie jars and are.Afraid of what the tax liabilities in Ireland would be.
So, what are the biggest issues? If we can focus on the latter, there, the people, because they tend to be the vast majority of people who tune into us.
You’re leaving Ireland, you’ve built wealth through, let’s say, pension funds, a property portfolio, stocks and shares, whatever, and you want to be taxed in the future in a jurisdiction that’s a bit friendlier.

Stephanie Wickham
Okay. Yeah. So I’ll definitely talk about the latter, but just want to add one tiny point for somebody departing and taking up foreign employment, particularly if they’re moving to a jurisdiction where there isn’t a social security system, we’d always encourage them to consider whether they might want to make voluntary contributions from a PRSI perspective.
Okay.

Paul Overy
So that’s an option.

Stephanie Wickham
That’s something to consider. It depends, obviously, on the age and the cost, et cetera. But just a nice little sweetener to be aware of if you’re going to some of these jurisdictions that don’t have social security.Covered.
So that’s one point. For the latter category, you’re really looking at a planning exercise and it’s definitely warranted. So for each of the different kinds of income and assets you mentioned, there’d be considerations, but let’s pick some of the headline ones.
There’s an anti avoidance provision in Irish legislation in section 29A of the Tax Act that basically is designed to disincentivise people from going outside of Ireland for limited periods of time, namely,Selling an asset while outside the reach of the Irish taxman and then returning to Ireland subsequent.
So, you would need to have that conversation with the client and make them aware of that. Some of our double tax agreements are actually tweaked to take that provision into account. And, you know, some of the tax friendly jurisdictions that we have treaties with tend to be in the Middle East.
And what we’ve seen in some recent tax appeal cases is that treaty protection is not as extensive as we would like it to be.What do I mean by that?
Well, when you look at the way that the double tax agreement with the UAE, for example, is written, it is quite clear that to be considered a resident of the UAE, you are somebody who is liable to tax there.
Now, I don’t believe Revenue have been as successful as they’d like to be in this claim, but it does go to show that the line of thinking is you can’t rely on a treaty if you’re not subject to tax in the jurisdiction, and that is one of the definitions required to offer treaty protection.
This means?

Paul Overy
Yeah.

Stephanie Wickham
It means that if you’ve got somebody going to the Middle East and they have acquired a portfolio of assets and they’re planning to liquidate it, they really need to take tax advice to escape both the ordinary residency tax charge that I mentioned and potentially to be cognizant of how Section 29A might apply in practice to them.
So, this is an area where sometimes barstool talk can be very dangerous because John will tell Michael.That he got advice about this, and then there’s a conception that this is what applies.
It can be very nuanced and specific on the circumstances that we’re looking at. And I think, particularly when you’re considering Ireland as one of the higher taxing jurisdictions in the OECD, you can generally say to somebody, Well, you’re moving from a high tax jurisdiction to a low one.
So taking good advice will pay for itself multiple times over very quickly. And I suppose, as well, also.From the perspective of scrutiny, you know, you need to be cognizant of the fact that there is cross border reporting between a lot of jurisdictions about things that are happening.
We know now with the Common Reporting Standard and FATCA that reporting does happen. So often clients will say things like, Well, how do revenue know? And it’s not necessarily going to be because you’ve told them.
It could be because an institution that you’re banking with has. So these are all, this is not scaremongering. These are facts. But I think it just goes to show how sometimes clients.Can kind of try to get themselves so far, and that’s brilliant.
But really, you know, working with a professional who can take you that whole way and also understands the importance of providing aligned advice. You know, often if we’re advising somebody who’s going outside of Ireland, you know, they’ve decided they’d like to live elsewhere, there is definitely a need to bring in a foreign tax advisor.
And this is another thing that we often find is that, you know, I can completely understand that clients would say, well, I just want to find an advisor who does it all.You look under the hood of how complex this can be, you start to realize that that’s usually a unicorn.
There is very few advisors who will advise you comprehensively from beginning to end on one of these transactions simply because of the number of moving parts that are in there.

Paul Overy
And so, in those circumstances where you’re dealing with a client who perhaps needs the foreign advisor, as you say, do you have a kind of network of people around the world that you have worked with that you can bring?
To the table in that?

Stephanie Wickham
We would have about 25 to 30 advisors in different jurisdictions that we would partner with. Some we would work with very frequently. So we would have, we actually have a team in the UK that are part of the Expat Taxes brand network, and they will offer UK advice, do UK tax returns.
We have partners in the US, Canada, Australia, the Middle East, South Africa, you name it, Germany, France, Belgium, like the common countries.
That we see our clients coming to and from.

Paul Overy
Right. Very good. You mentioned DTAs, double tax agreements, there. And when we were talking beforehand, you said there are a number of common fallacies, I think were the words you used, that people believe certain things about DTAs that may not be exactly true.
Can you tell us what those common fallacies are?

Stephanie Wickham
Firstly, you know, treaties are designed to avoid double taxation. And that itself can sometimes be a bit of a confusing phrase. That is not the same as that means you only pay tax in one country.

Paul Overy
Yes.

Stephanie Wickham
That’s not how they work. Yes. So, you know, clients will often come to us and, you know, the comments that we’ll hear, which have an element of truth to them, are, you know, well, there should be credit for the tax I paid.
Or I already paid tax on that, so Ireland doesn’t get to tax it again.And it’s really that simple because when you actually look under the framework that the OECD has kind of drafted the treaties on, it provides different articles in the treaty, articles being paragraphs or sections that apply to different income and gain types.
So, normally in a standard treaty, you’ll have an article for employment income, interest, dividends, rental income, capital gains, pensions, government pensions, etc., etc.
The gist. And when you read each of those, you’ve got to be very clear when you read it as to where the individual is a resident for the purpose of the treaty, where the source of the income comes from, and then also how the credit mechanism works practically.
Different treaties. So, for example.

Paul Overy
That all sounds very simple, isn’t it?

Stephanie Wickham
Very simple. Very simple.

Paul Overy
Okay. So, I mean, all of that, if I’m understanding you correctly, then it’s not only about the income.
Itself in that case, it’s about the source of the income, it’s about the, you know, whether that’s a commercial source, whether it’s an institutional source, whether it’s a governmental source.

Stephanie Wickham
Exactly.

Paul Overy
Okay, okay. And you said too, when we were talking about that subject, there’s a difference between compliance and planning.

Stephanie Wickham
Yeah.

Paul Overy
So give me some meat on the bones of that one. What do you mean by there’s a difference between compliance and planning?

Stephanie Wickham
The taxes are a necessary evil, really, aren’t they?An important function in a society like what we live in. But I’m a big believer in what do clients want?
They want to comply, they want to know that their taxes are in order, but nobody likes to pay more tax than they need to. So, how we approach the tax return preparation is we will use it, particularly if a client has come to us, as a way to kind of give them confidence that everything’s in order.
So, are you compliant? But equally, to use it as an opportunity, how can we do better?Clients, depending on their tax profile, can arrange their affairs in a way legitimately to minimise tax leakage, which obviously is what everybody wants to do.
So, what does that look like? I mean, basic benign things like telling a client, you know, have you considered making an AVC contribution to your pension scheme up until the end of October, for example?
And clients will often go, Well, I forgot I could do that. Helping them claim tax credits or helping them understand that, for example,A certain foreign pension might qualify for a tax credit that maybe a dividend doesn’t qualify for.
So, if we’re in a different category of non domicile clients, we will work with clients to help them understand what makes more sense for us to bring to Ireland in terms of income that we’re going to drag into the tax net.
So, and then there’s a broader piece as well, isn’t there, around kind of helping people understand or plan for these major life events. So, people will often say things to us like, but it’s just aAnd really, it’s more than that because it’s actually representative of where you are on the totem pole in terms of what you owe revenue.
But it also should focus your mind on what’s happened, what is going to happen, and what’s my plan for that. So you need to be having that proactive conversation with your tax advisor.

Paul Overy
That’s funny. You say that. You remind me what I say to people on my consoles regularly is that the secret to tax minimization is about looking into the future.
And saying, what’s likely to happen? And what can I change today that detaxes those events? And that’s really, you know, in a paraphrasing, that’s a lot of what you’re saying there, if I’m reading you correctly.
You said, too, about, you know, you mentioned the barroom advisor there. And, you know, before we were recording, you said spurious sources.
Yeah.About either coming to or going away from Ireland.
You know, one of the things I often say to people when I’m talking to them myself is there are times when people outgrow the advisors they had when they were younger and poorer and had very different circumstances.
You know, that doesn’t mean that those advisors tell them when they’ve outgrown them because.You know, as I’ve said before, turkeys don’t be voting for Christmas.
You know, so, but it sounds to me from what you’re saying is that, you know, this is a very specialist area. And while, you know, the standard accountant might know a bit about this, that if either you’re leaving Ireland or coming back to Ireland or coming to Ireland for the first time, really specialist advice is needed in this space.
Isn’t it?

Stephanie Wickham
And I’ll give you an example of that that might resonate with people listening. You know, when you talk about those kind of tax friendly jurisdictions, what commonly happens, and we’ve seen it, is that there will be a product sold to the client that is referred to as a pension.
And I believe that’s very misleading because generally pensions are tax efficient products designed to provide for a tax efficient retirement. But if you don’t pay tax, then it’s not really a pension. And when you actually look at it, a lot of the times it’s just an investment product.
With these, and they will keep calling it pension because that’s what they were told it was. And it’s actually usually nothing like a pension in terms of how Irish revenue are likely to look at it.
You know, it’s likely going to have the characteristics of what we would call an offshore fund. So, an account that has possible deemed disposal rules, tax profiling that, you know, is not aligned with the majority of the taxpayers we’d work with.
And it’s not to say that the person who sold you that product had any malice or, you know,Know ill intent, but I suppose they don’t know what they don’t know, and the onus is on you as the person paying the premium and expecting to benefit from the product to take the advice in advance.
I think, as well, in terms of who you take advice from, you wouldn’t go to your GP and ask them to perform a lobotomy because you understand that that’s not where their specialism lies.
And this, not to make say that our tax is like lobotomy, but the point being that.It sometimes does, probably as painful. But I think the point I’m trying to make is you know, use specialists when you’re going through these life events.
So, good tax advice is always warranted for major life events in any setting. It is crucial when you are moving across two tax jurisdictions. And it’s even more important when you’re moving to a high tax jurisdiction like Ireland because you don’t negotiate with revenue when you’re a resident and something’s due and payable.
You pay it and move on with your life. The consequences are what they are at that point.

Paul Overy
Yes, you can only change tomorrow, not yesterday.

Stephanie Wickham
It’s to your point. You plan for this. So, and I think as well, you know, it’s sometimes that you feel like you’re adding to the mental load. Like to go back to my point earlier, there’s a plethora of things you have to do when you relocate.
I would always encourage clients to take advice about six months before they move, if possible. It gives us time.

Paul Overy
No matter which direction they’re going in.

Stephanie Wickham
Yeah, it is.It is, you know, you can save people from themselves in that timeframe when somebody approaches you three weeks before they come, it’s a bit more difficult.
That is not to say that there isn’t a valid reason to take advice after a move. There is. Sometimes it’s damage limitation at that point, but that’s not always the case.

Paul Overy
Okay. And earlier I asked you about what maybe the contents of a plan to leave should be in terms of.Of the issues that are facing people who are, you know, sticks up from Ireland going somewhere else.
Now, let me say, let’s talk about people coming in the other direction.

Voiceover 2
Yeah.

Paul Overy
So, what are the issues facing people either coming home or indeed, as I’ve witnessed on my own consoles, people in Vancouver thinking I might like to live in Ireland because Granddad came from Sligo or whatever?

Stephanie Wickham
Yeah. Okay. Really, really good point. So, the majority of our clients would probably fall into that category.You know, a lot of people will be taking tax advice before they physically move to Ireland.
And again, we come back to those two concepts, you know, residency and domicile, as being the ones we anchor our discussion on. And I think, you know, for somebody who’s born and raised in Ireland, the planning usually centres around the timing of their residency.
You know, when are you going to enter the Irish tax net? And again, sometimes a misnomer, but you can be physically living in Ireland, but not yet have exceeded the number of days to be considered resident.
So, that’s an important point. Perhaps for a lot of people, and using the example of what you just said there about the individual who had granddad born in Ireland, we’d be having a conversation with the client about their domicile status.
So, what is domicile? Well, domicile is a legal concept that’s enshrined in tax law. It’s essentially a test of where an individual’s original permanent home was.
And you’re deemed to inherit your domicile from your father, assuming you were born in wedlock.Most of our clients will present with a fact pattern that would suggest they’re non domiciled.
That doesn’t necessarily change simply because they’re coming to live in Ireland. And their tax profile opens up a lot of opportunity to take advantage of the remittance basis of tax.
So, when we were chatting previously, you know, the UK had a scheme like this previously, ours was quite close to it. The UK scheme had changed over the years and they’ve just done away with it.
Ireland retains it and it is very useful for clients coming here who are non domiciled. Why is it useful? Well, essentially, it means that their foreign income and their foreign capital gains can remain outside the charge to Irish tax.
So, all of a sudden, when they’re terrified and they hear that Ireland is a high taxing jurisdiction, it changes things.

Paul Overy
Yes.

Stephanie Wickham
But the application and the practical living of the scheme and how it works requires guidance because it can be complex.We have a lot of clients where one spouse is non domiciled and one spouse is Irish, returning Irish.
So those couples benefit from having a conversation before they come back. And I think what people sometimes don’t realise is that if they don’t get the proper advice, they’ll actually find that both their taxes, their tax bill in Ireland is higher than it needs to be, and also the cost to prepare the tax return can be higher because if it’s.
It’s complicated. And if you try to DIY it and you get it wrong, it can get complex very quickly. Very quickly.

Paul Overy
Yeah. So just go back to something you said there. And that’s something I’ve come across quite a lot in consuls, people from overseas, where one partner, one spouse is Irish and one spouse is Canadian, let’s say.
So the Canadian is, even when they come here, is not domiciled in Ireland. They’re still, they’re domiciled.Is that right?
Remains in Canada at that stage because, as you said, it came from dad in terms of born in wedlock. So, would it be sensible, let’s say this couple have joint assets held in Canada, that when they come home, one is non domed and one is domiciled?
So, some of those assets will be taxable in Ireland because they’re in the name of the domiciled.Individual. Whereas if that individual gave all those assets to his or her spouse before they came home, then those assets would all be non DOM assets.
And is that something that comes up?

Stephanie Wickham
I think it has come up because there’s anti avoidance to prevent inter spousal transfers if it’s not done in a careful way. So I think the conversation there really turns on the importance of taking advice in advance.
Yes. Because essentially, you know,There’s anti avoidance that would prevent two resident spouses in that circumstance from transferring assets between each other to benefit from.

Paul Overy
Sure. But if they’re before they’re resident, I was thinking.

Stephanie Wickham
It would definitely be a consideration and something that would warrant review. The point I would make is, and this is kind of where sometimes experience comes in, specifically when you’re talking about certain jurisdictions, you’d always be cognizant as well about, well, you know, if we do something to be efficient.
From an Irish tax perspective, and obviously subject to review, what are the foreign tax consequences? So, this is my point about.

Paul Overy
And that’s where your partners around the world come in.

Stephanie Wickham
The cross border tax.

Paul Overy
While it might benefit from an Irish tax perspective, there might be an equal or opposite negative from the local tax perspective, as it were.

Stephanie Wickham
And often the conversations we’ll have with clients as well will turn on what do you want? Because the non domicile.Remittance basis of tax is very advantageous if the client has no immediate or upcoming need or desire for the income or gains in Ireland.
But if they say to you, well, actually, we think we’re going to build a house and we need the money to build a house for it.

Paul Overy
Sure, well, then they’re fine. Because that tax efficient treatment, or from an Irish perspective, tax efficient treatment of the NOM DOM assets is only based on those assets that stay outside of Ireland.
Right. Exactly. So if they’re bringing them in here to build a house, then it’s a moot conversation anyway, certainly around that percentage of the asset.

Stephanie Wickham
This is a cautionary tale as well because there’s exceptions to that. Of course, like everything in tax. And if we go back to my point there about the pension product, which I don’t view as a pension product that’s been sold to somebody, it’s quite likely that that doesn’t qualify for the remittance basis.
There’s a specific out for an asset.That is an offshore fund in a certain jurisdiction. That if somebody was to sell that, the gain would be taxable in Ireland. And perhaps most crucially, the eight year deemed exit event can arise.
That doesn’t get remittance basis. So, this is the type of thing you kind of don’t want to be so sharp. You cut yourself. You know, you kind of, we do a portfolio review. What have you got that we don’t like before we start to talk about how the remittance basis might apply?
And then you start to understand from the client, what are your plans?What do we want to do?

Paul Overy
Yeah, and earlier you said to me too about, and I think in a way you’re talking a little bit about this now, is the cost benefit analysis. I think you were telling me a story about somebody who might be moving abroad.
Tell me that story again, please.

Stephanie Wickham
So this would come up from time to time where people will very rightly identify that if, you know, perhaps one partner is working abroad, perhaps in a low tax jurisdiction,Being paid very well, that the family could live apart for a period of time, the individual would break their Irish residency and their employment income would be outside the Irish tax net.
That would then give them the opportunity to potentially bring that money back to Ireland without there being an Irish tax charge. So obviously it’s very fact specific. But what we were saying earlier, and we’ve seen lived examples of this, is that sometimes clients can become very excited about a tax saving.
It is to help them understand what that looks like. My personal approach is to quantify what that figure might be because we have to marry that against the lifestyle cost of, in that example, having perhaps one partner in Ireland with young children and a partner outside of Ireland who is, if they’re trying to remain non resident, limited in terms of the amount of time they can actually be here, which probably looks like missed family events, you know, foreign.
Family holidays, lots of things that might not align with the stage of life that they’re at. So, you know, our job as tax advisors is to be very specific and clear on what the tax law says and then to guide the client on how that is going to be for them as a lived experience.
And I often love saying to clients in a consult, particularly when someone’s coming back to Ireland, we’ll just do a very brief tax estimate. What do we think your Irish tax bill is going to look like? Because people myopically can do a bit of research and theyGo, oh, it’s going to be terrible.
It’s going to be huge.

Paul Overy
Yeah.

Stephanie Wickham
And it doesn’t have to be.

Paul Overy
Yeah.

Stephanie Wickham
But it’s just, I often find, even personally, you know, we worry about the unknown. But once somebody brings certainty and a quantum to what we’re worried about, it tends to kind of not be as bad as we think it’s going to be or as good.
Exactly. Or equally not worth it. Yeah. You know, when you’re going the other direction.

Paul Overy
So you’re not going to be able to see your kids grow up, but you’re going to save yourself a hundred grand in tax over five years, for example.

Stephanie Wickham
Yeah.

Paul Overy
The question then is, try.20 grand a year worth giving up watching your kids grow.

Stephanie Wickham
That’s exactly it. And that’s very much a personal decision. But I think, you know, as advisors, we need to be very clear that we shouldn’t get lost in jargon or technical talk because it intimidates people when they’re already stressed.
Break it down into easy to understand, make it real for me. What does that mean for me?

Paul Overy
Yeah. And also, I think, and I agree, you know, I’m wholeheartedly agreeing with you here. Just because you can save a few Bob and Tax doesn’t mean you should.Because there is always a sacrifice, isn’t there, in some shape or form to make that saving?
And that’s where I have a problem with a lot of so called advisors out there, whether in the tax world or other financial disciplines, they’re focused on delivering one outcome.
So I’m going to tell you how to pay less tax, but forget about the ripple effect.Of those, that shade, whether that’s the personal ripple effect, like not being able to see your kids grow up, or indeed it means that, okay, you save a few bob now, but you pay a hold of tax in five years’ time that you wouldn’t have paid.
So I think, you know, it’s, it’s, I think a lot of advisors fail to recognize the humanity of their clients and break it down into pure euro and cent terms.

Stephanie Wickham
And I think you kind of, you know, what clients will often say back to us, you know, at the end of a consultation is, we’re so relieved. We were so confused. And really, that’s what you’re being paid to do is to take away that.

Paul Overy
Take away the confusion.

Stephanie Wickham
Take away the stress, you know, give them back time and money. Yeah. Because they’re the financial support.

Paul Overy
You said about people worrying. I mean, you know, it’s a broadly accepted fact that 90% of what we worry about never happens. Exactly.
In is to get the advice and make sure that you walk into a decision to come to Ireland, to leave Ireland, come back to Ireland after you left a while ago, that you make that with your eyes wide open, that you understand the ramifications of it, and you understand the financial impact, which is just one of the things that is relevant.
Exactly. Well, look, I mean, that’s been brilliant. I mean, I think, you know, while I said to you before we started recording that,Of our audience are Irish, are based in Ireland indeed.
Many of them, I hope, listening to this will be contemplating leaving. Many of them will know people who’ve already left who are contemplating coming home.
And then even some of them, amongst the 4%, might be people listening to us in far flung areas and thinking of moving to Ireland. So for today, Steph, thank you very much for coming in.
I’ve been delighted to meet you. I think.You know, there’s no doubt you’re providing a service that will resonate with many viewers. And, you know, I also have no doubt we’ll get a bunch of questions now that I didn’t ask you.
So we might ask you back again another day to answer those questions.

Stephanie Wickham
Of course, feel free to send them on to us. We’ll do it again.

Paul Overy
Well, for now, Steph, thanks a lot for today.

Voiceover 2
Thank you.
Specific to your personal circumstances before acting or refraining from action in connection with the matters dealt with in this series. The material in this podcast is intended to give general guidance only.