Tax Clearance for Non-Residents in Ireland | Income Tax and CGT
Non-residents who have earned income or have capital gains must adhere to the tax regulations in Ireland, including filing tax returns and obtaining Tax Clearance for Non-Residents in Ireland where necessary. The processes for Capital Gains Tax (CGT) and Income Tax clearance for non-residents are outlined below.
Income Tax for Non-Residents
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- Residency Status: Non-residents in Ireland are typically taxed only on their income that is sourced in Ireland. Non-residents may be subject to Pay As You Earn (PAYE) tax on income from Irish employment or taxed on income from Irish property or business.
- Filing Requirement: Non-residents must file an Irish Income Tax return (Form 11 or Form 12, depending on the type of income). If there is no income tax to pay (for example, if all taxes have been paid under PAYE), a return may still be required.
Obtaining Tax Clearance
What is Tax Clearance?
Tax clearance is a confirmation from the Irish Revenue Commissioners that an individual or entity is up-to-date with all tax payments.
How to Apply for Tax Clearance?
Non-residents can apply for Tax Clearance Certificates using the Revenue Online Service (ROS), provided they have registered with the system.
For non-residents without a ROS account, the application can be submitted by completing a form (e.g., Form TC1) and submitting it by post or online.
Tax Clearance Certificate for Non-Residents may be required for specific transactions, such as receiving payments for Irish work or business, dealing with Irish government bodies, or conducting certain financial or legal transactions in Ireland.
Documents Required
- Proof of income earned in Ireland (e.g., payslips, rental income statements, etc.).
- Evidence of tax already paid or withheld (e.g., PAYE tax or tax paid on rental income).
- Identification and Irish Taxpayer Identification Number (TIN), if applicable.
Validity and Expiry
The certificate is usually valid for 12 months, and taxpayers are required to renew it annually to maintain their status of tax compliance.
Capital Gains Tax (CGT) Clearance for Non-Residents
Capital Gains Tax is charged on the profit or gain made from the sale or disposal of certain assets, including Irish property. Non-residents are liable to CGT on the disposal of Irish assets (mainly Irish land or property), and may need to go through a clearance process for this.
CGT for Non-Residents:
- Liability: Non-residents are generally only liable for CGT on the sale of Irish property, which includes land, buildings, and interests in land.
- If the non-resident sells an Irish property (real estate), the gain from the sale is subject to CGT at a rate of 33%.
- Exemptions: If the non-resident sells certain assets that are not connected to Irish property or have special exemptions (e.g., certain shares), CGT may not apply.
CGT Clearance Process:
Pre-Disposal Clearance:
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- Before disposing of Irish property, non-residents may apply for clearance from the Irish Revenue Commissioners to confirm that all CGT liabilities are met.
- This can be done by submitting a request to the Revenue with details of the planned transaction. They will confirm if CGT applies to the disposal and whether any outstanding tax liabilities exist.
- The Pre-Disposal Clearance is not mandatory but is recommended to ensure compliance and avoid penalties or fines.
Filing CGT Returns:
- Non-residents must submit a CGT return (Form 11 or other relevant forms) if they dispose of Irish property and are liable to CGT.
- The tax return must be submitted by October 31st following the year of the sale or disposal.
- Payment of CGT is also due within two months of the disposal of the asset, which means that if you sell an Irish property, the tax payment deadline is typically within 8 weeks of the sale date.
Documents for CGT Clearance:
- Details of the sale (contract, deed of sale, etc.).
- Information on the cost of acquiring the property and any allowable expenses for calculating the capital gain.
- Evidence of the Irish property’s current value and any improvements or relevant adjustments.
Key Steps for Non-Residents in Ireland:
- Determine Residency and Tax Obligations: Establish whether you are considered a non-resident and understand which Irish income or assets are subject to tax.
- File the Relevant Returns: Submit income tax returns (Form 11/12) and CGT returns (Form 11 or other applicable form) to the Revenue Commissioners if necessary.
- Apply for Tax Clearance: If required, apply for a tax clearance certificate via ROS or by post. This is important for business dealings and any financial transactions involving Irish income or property.
- Ensure CGT Compliance: If selling Irish property, comply with CGT rules, file returns, and ensure that the correct amount of CGT is paid.
- Maintain Tax Records: Keep records of all transactions, income, tax payments, and clearance documents for reference and potential audits by Irish Revenue.
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