Becoming a Tax Exile: Clarification of the Rules? Would this Work?

missmoleman

Hi Guys,

I was reading Tax Magic 2012 though I'm having a bit of difficulty understanding matters relating to living abroad and income tax. It says:

"The simplest way to avoid income tax is to not live in Ireland for more than 140 days (on average) per annum. In this way, you will not be
resident in Ireland for tax purposes and will avoid paying 41% tax, 4% PRSI and up to 10% universal social charge."

At the moment I live in Ireland (though I am abroad quite a lot, for maybe 3 months of the year) and take a salary from my company paying 50%+ income tax on this.

Let's say I were to move to Montenegro (9% max income tax) and run my business from there (it's internet based so I could do this easily enough). I live there but come back to Ireland a few times per year (for less than the 140 days average over 2 years).

Am I now not subject to Irish Income Tax? Would I just be liable to 9% income tax in Montenegro?

Ireland has a tax treaty with Montenegro as far as I'm aware.

Any advice on this would be much appreciated!

Thanks

srsly78

This info is something you have to pay lots of money for :pac:

The first complication is the distinction between your personal affairs and business affairs.

missmoleman

Thanks for the reply!

Funnily enough I did go to a tax advisor for a not altogether dissimilar matter and €500 and 1.5 hrs later the info I got was much the same as that I was able to find on the internet!

So rather than pay a similar sum again I'm hoping some nice person might be able to advise me. And if it seems a possibility then I'll shell out the big bucks for more concrete advice:)

I'm sure I could argue that that the centre of control of the company is essentially wherever I am. While the practical work of the company is done in Ireland, I am essentially the only employee and running everything.

Any further advice would be much appreciated:)

srsly78

Err e500 should be for the year, not for one consultation (as part of a larger package probably) Get a better accountant/advisor.

missmoleman

True, I won't be going back to the original advisor!

But a trip to discuss this with the author of Tax Magic is I think about €250 so I was hoping to get enough advice to work out whether paying up for this was worthwhile:)

Marcusm

srsly78 wrote: »

Err e500 should be for the year, not for one consultation (as part of a larger package probably) Get a better accountant/advisor.

You might get a tax return filed for €500 but you won't get any decent well considered professional advice on residence tailored to your particular circumstances for such an amount.

OP: it is conceivable that you could establish and maintain non residence for Irish tax following the plan you have outlined although the devil will be in the detail. Establishing yourself in a treaty country where such treaty has a residence tie breaker test would be advantageous. I would not consider approaching anything live 140 days in Ireland and you will need to be careful as to how you carry on your business while in Ireland.

missmoleman

Thanks for that.

The Montenegro tax treaty seems to have such a tie beaker.

I wonder if I would need to move the company to the other country also, or would it be enough that I was controlling it from there? The later might be quite complicated.

In terms of having a permanently home, I'd be unlikely to want to buy a home wherever I go, but if I was renting long term abroad and not renting in Ireland hopefully that would satisfy that.

Thanks

Mr. Incognito

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