Capital Gains Tax Planning with residence and domicile

Capital Gains Tax Planning with residence and domicile

Capital Gains Tax (at 33%) in Ireland is a tax imposed when you sell an asset. This is distinct from when you operate as a trade which is taxed by way of income tax. It was introduced to the UK in 1965 to commercial trasactions which up to then were outside of the tax net and 10 years later the Capital Gains Tax Act 1975 was introduced in Ireland. I have outlined below three tax planning mechanisms that can assist people in certain circumstance to minimise their capital gains in Ireland

(1) If you are non resident (you have spent less than 183 days in Ireland in a tax year or 280 over two years) but still ordinarily resident in ireland (i.e. you are less than 3 year out of Ireland)then you can use the fact that irish tax treaties take precidence over domestic tax law. By living in a country with a lower capital gains tax rate (which has an appropriate tax treaty with Ireland), you can elect to have a gain taxed in your new country of residence and avail of the lower rate.

 (2) If you are married to someone who is non domiciled in Ireland. i.e they were born in another country and have not changed their place of domicile to Ireland (there is more to domicile than this but it gives an indication of what it means) then if you transfer foreign assets to your spouse before you sell them and as long as the proceeds from their sale are not remitted (brought into Ireland) then they should not be taxable under capital gain tax in Ireland

 (3) If you are non domiciled in Ireland (i.e. born in another country and you havent changed your domicile to Ireland) then if you sell assets abroad then only the amount that you bring back into Ireland is taxable

Of course these tax planning issues are only outlined above and you should get professional advice from an accountant such as ourselves before you avail of them. In particular in relation to the five year rule for CGT holidays (which would appear to be in contravention of EU Law.
 Author Frank McGivney BA ACMA CGMA
 Frank McGIvney & Co. Ltd,
 38 Cherryhill Court, Kells,
 Co. Meath
 0469293891 fmcgivney@live.com