Moving to a new country can be exciting, but it doesn’t come without challenges. Aside from the logistics of packing up and moving abroad, as an expat, it’s also important to consider the tax implications of your move. Without the right approach to tax obligations, this new chapter of your life can quickly be overshadowed by stress.
But how can you ensure this doesn’t happen?
Navigating the tax system of a new country may seem overwhelming, but with the right knowledge and guidance, you can ensure you meet your compliance obligations and avoid unnecessary risks.
To start you off, we’re here with 5 tips for ensuring tax compliance when moving to or from Ireland and getting the peace of mind you need to enjoy your move!
Tip 1: Get to Grips With Your Tax Residency
Determining your tax residency status is one of the first steps for expats moving to or from Ireland. Tax residency plays a crucial role in determining your tax obligations, both in terms of the country you’re moving to and the country you’re moving from.
Under Ireland’s tax rules, your tax residency is determined by how many days you spend within Ireland during a tax year.
Therefore, you are a tax resident in Ireland if you are in the State of Ireland:
- for 183 days or more in a tax year, or
- for 280 days or more in total in the tax year and the preceding tax year
For countries other than Ireland, your tax residency will be determined by their unique guidelines (which should, ideally, be researched before your move!).
How Can Tax Residency Impact Me as an Expat?
As an expat, your tax residency status plays a significant role in determining how you are taxed. With tax rates varying across borders, it’s crucial to understand where your tax liability lies and how it can impact your financial situation.
Double taxation agreements
Double taxation agreements refer to treaties between countries that aim to prevent individuals from being taxed on the same income in both their home country and their new country of residence.
Split-year treatment allows Irish resident individuals to be taxed on their employment income for only a portion of the tax year. For instance, under split-year treatment, those moving to Ireland will only be treated as residents in Ireland from the date of their arrival on their employment income (with employment income from that date being taxed in the normal way). However, split year treatment is not automatic so it’s worth understanding how to qualify for this relief.
Depending on your tax residency status (especially when moving abroad during the tax year!), these provisions can help ensure you’re not penalised unnecessarily. However, because each country has its own tax laws and regulations, it’s important to seek advice from a tax professional who can provide context on the guidelines you must follow.
Especially when moving abroad from Ireland, consulting with a tax expert with international expertise and knowledge of different tax authorities is the best way to ensure your tax affairs are in order.
Tip 2: Know Your Obligations (And Avoid Making Assumptions!)
Once you establish your tax residency, your next step is to educate yourself about your tax obligations in Ireland or abroad.
For example, as an expat in Ireland, you may be required to report income to the Irish Revenue that has been earned abroad. Likewise, a person moving from Ireland to another country may also be required to report income earned in the State (often referred to as ‘worldwide income’).
To mitigate the risk of overlooked tax stipulations and ensure you remain compliant with tax reporting requirements as an expat, we recommend:
- Never make assumptions about what income is taxable and what isn’t;
- Maintaining detailed records and documentation for all income and assets, even if they were earned or acquired before your move;
- Keeping track of important tax deadlines and filing your tax returns accurately and on time;
- Being proactive in staying up-to-date with changes to tax laws or reporting requirements;
- Researching exemptions or deductions available to you as an expat; and
- Consulting with a tax professional who specialises in expat taxation and global compliance
Tip: Compliance requirements can evolve, which is why having an established relationship with a tax advisor can also be beneficial long after your move takes place. Especially for expats working for multinational companies or exploring global mobility, having sound advice on hand is always beneficial!
Tip 3: Get to Know Your Entitlements
In addition to meeting your tax obligations, it’s also important to understand the tax entitlements and benefits available to expats.
For example, as an expat moving to or from Ireland, you might be entitled to:
- Potential deductions or tax credits
- Tax exemptions
- Relocation packages
- International tax regimes/ schemes (e.g. the non-habitual residency scheme in Portugal)
By taking advantage of certain entitlements, you can optimise your tax position and minimise your tax liability. However, as an expat moving abroad, it’s vital to seek professional guidance before building a strategy around specific entitlements.
Tip 4: Keep Accurate Records and Don’t Miss Important Deadlines
As experienced tax advisors, we can’t emphasise enough how important accurate record-keeping is for your move to or from Ireland. Especially when it comes to your income and assets, having the necessary documentation you need in advance can help streamline your tax compliance and ensure you meet all reporting requirements more easily.
When it comes to maintaining records, we recommend focusing on:
- Keeping detailed records of your income sources, including employment income, investment income, and any other types of earnings/gains
- Maintaining documentation for expenses, such as receipts and invoices, that may be eligible for deductions or credits
- Retaining records of any assets you own, including property, investments, and other valuable possessions
- Storing important documents related to your taxes, such as tax returns, tax identification numbers, and correspondence with tax authorities
- Keeping track of any changes in your personal circumstances that may impact your tax situation, e.g. marriage, divorce, or the birth of a child
Tip: Accurate record-keeping not only ensures compliance, it can also help ensure deadlines are met, and penalties are avoided. Organised documents are always a great start for more organised taxes!
Tip 5: Seek Professional Tax Advice
There’s no doubt that navigating tax compliance in a new country can be challenging. This is why seeking professional tax advice can provide invaluable guidance and peace of mind — allowing you to focus on other aspects of your move.
With the right advice and support, you can confidently navigate tax compliance and get your new life off to the perfect start!
An experienced tax advisor can:
- Provide personalised advice tailored to your specific circumstances
- Help you understand complex tax laws
- Optimise your tax position (offering advice on deductions and entitlements)
- Ensure full compliance with tax requirements in your home country and abroad
- Assist with tax planning and strategies
- Guide you through the tax filing process (and ensure you meet deadlines!)
- Keep you informed of changes to tax law
How Expat Taxes Can Help You Ensure Tax Compliance When Moving to or from Ireland
With the right approach, moving to a new country for better weather or enhanced quality of life doesn’t have to be as daunting as it sounds. That said, with an increase in individuals moving around Europe (and beyond!), and many multinational companies discovering the intricacies of tax compliance, professional expertise is undoubtedly required.
At Expat Taxes, we specialise in assisting private individuals and corporate clients with both domestic and international tax compliance. Our experienced tax professionals can provide expert advice tailored to your unique circumstances.
From understanding tax residency to maximising entitlements and advising on accurate record-keeping, we offer comprehensive support throughout the process. By partnering with us, expats can have peace of mind, knowing their tax affairs are in good hands.
DISCLAIMER The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting or refraining to act. All information and taxation rules are subject to change without notice. No liability whatsoever is accepted by Expats Taxes for any action taken in reliance on the information in this article or any of the articles in our blog series.
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