Resident in Germany, few months in Ireland, whats the tax situation?

CamperMan

We are residents in Germany for 7 months of the year, the rest of the time in Ireland, whats the tax situation?, do we have to pay social tax, income tax, etc. to the Irish government for the few months we spend in Ireland per year working?

We are registered for income tax also in Germany

srsly78

You are tax resident in Germany because you spend more than 183 days there. You should pay nothing in Ireland.

What's interesting tho, is if you could be 183 days resident in Ireland, but still avail of cheap german healthcare etc while over there but paying lower Irish taxes.

CamperMan

Thanks.

Simon

nompere

From the Revenue website: http://www.revenue.ie/en/tax/it/leaflets/res1.html

Tests of residence

Test 1

The first tax residence test is that an individual is regarded as resident in the State for tax purposes for any tax year in which he or she spends 183 days or more in the State.

Test 2

Where the time spent in the State in a tax year is less than 183 days, then the second test comes into play. The second tax residence test is the 280 days two-year test and involves taking account of an individual’s presence in the State, not alone in one tax year, but also in the preceding tax year. Under this test an individual is regarded as tax resident in the State for tax purposes for any year in which he or she spends a total of 280 days or more in the State in the tax year and in the immediately preceding tax year. However, this test will not apply in any year that an individual is present in the State for not more than 30 days.

A person who spends five months in Ireland every year is likely to be resident here for tax purposes under test 2.

A person who is simultaneoudly tax resident in two different jurisdictions needs to talk to a professional who understands the ins and outs of the double taxation treaty.

Mr. Incognito

In short- if you are resident in both countries it is where your economic interests are most centered.

From what you say it sounds like you are German residents that work in Ireland for a few months every year.

Here Ireland as the employment country has primary taxing rights. If you are paying German social security contributions you will be exempt here if you produce a E101 Form/ Otherwise you will be liable for Irish social security. You will have to pay Irish PAYE regardless.

The only real time you will have to look at tie breaking clauses where employment income is involved is where there may be an obligation under German Income tax law (which I am not au fait with) to tax this income in which case you will be entitled to a credit for the Irish tax paid under Double taxation Treaties.

srsly78

The link supplied above contradicts the above two posts.

Mr. Incognito

srsly78 wrote: »

The link supplied above contradicts the above two posts.

Not if you are reading the right section- Section 4. The OP is a German coming to work in Ireland for a few months of the year. Irish Employment income is ALWAYS taxed in Ireland first.

srsly78

Incorrect about the ALWAYS. He could be on secondment from a German company to an Irish one (this is pretty likely I think). Also "Irish employment income" is vague. He could be paid by German company into German bank account for work done in Ireland.

I use this arrangement to spend more than 183 days in the UK but pay only Irish tax.

I do agree that this stuff can get pretty complicated, and proper advice should be sought.

Mr. Incognito

Yes Always.

If a person is on secondment here the foreign employer is oblidged to register here and operate Irish PAYE and PRSI as well as German Income tax on it unless it falls into specific exemptions as outline in the Tax Briefings

If work is performed in Ireland it is taxable here regardless of the pay arrangements, salary arrangements or anything else.

srsly78

You just said yourself there were specific exemptions, that means -> not always.

If I went to Germany and worked for 5 months (for my Irish company), I would not pay a cent in German tax. I work in the UK a lot and I don't pay a cent in UK tax. This is all 100% legal. Are you saying Irish law is radically different from other eu countries in this regard?

Mr. Incognito

The exemptions are very narrow- in short if you are only here for less than 30 days.

As it happens Ireland has moved in line with other jurisdictions like the UK adopting the location of employment test.

If you are seconded most employers will pay your foreign tax and employ a firm to operate a shadow payroll and reclaim the foreign tax under the DTAs.

I don't know anything about German tax but I know 100% that if you work in the UK then UK has primary taxing rights on that employment income. I know that because I worked in a Big 4 Firm reclaiming these exact repayments back in the day.

The Statement of Practice -first one below in 2007

http://www.revenue.ie/en/practitioner/law/statements-of-practice/index.html#section1

namenotavailablE

As noted by MrIncognito, the key point under the Irish tax system is that "income from a non-Irish employment attributable to the performance in the State [i.e. in the Republic of Ireland] of the duties of that employment is chargeable to income tax in the State and is within the scope of the PAYE system of deductions at source."

Source: This document issued by the Irish Revenue (especially chapter 3)