What is split year relief?
It is a relief that splits the tax year so that income from employment after you depart Ireland is no longer taxable here.
Does it apply to me?
It depends. If you have worked remotely outside Ireland during the pandemic for an Irish employer it is likely that your employer withheld Irish PAYE on your income. This PAYE has been paid to the Revenue Commissioners.
You may be entitled to split year residence relief for 2020 if you left Ireland during the pandemic and have not and do not intend to return to Ireland in 2021.
What does that mean?
Well, in short, you may be entitled to a refund of PAYE withheld at source on your employment income.
Bear in mind you may also be taxable in the location you worked during the pandemic but given Irish tax rates are among the highest in the world for individuals in most cases a refund of Irish PAYE offers a cash saving for the employee.
PAYE may be due to be refunded on:
– your salary
– RSUs that vested to you while you were non-resident
– stock option gains
Split year relief ONLY applies to employment income. Recent Revenue guidance indicates you must be outside Ireland for more than a temporary purposes and for at least 15 months to qualify.
Contact us if you would like to discuss whether you are eligible for split year relief for 2020.
The deadline for 2020 income tax returns is 31 October.