Tax credits and new to Ireland

segaBOY

My friend is started work in July. She has just moved to Ireland from another EU country and is filling out a 12A. Will the next 6 months income get a tax credit for the full year (i.e. 01 Jan 13 to 31 Dec 13) or will she only get 6 months worth of a tax credit (i.e. 01 Jul 13 to 31 Dec 13)?

relax carry on

segaBOY wrote: »

My friend is started work in July. She has just moved to Ireland from another EU country and is filling out a 12A. Will the next 6 months income get a tax credit for the full year (i.e. 01 Jan 13 to 31 Dec 13) or will she only get 6 months worth of a tax credit (i.e. 01 Jul 13 to 31 Dec 13)?

It depends on how long she is planing to stay in Ireland. If the intention is to stay longer then 6 months then yes full credits are granted. There's a section on the 12a to advise revenue of this.

hognef

relax carry on wrote: »

It depends on how long she is planing to stay in Ireland. If the intention is to stay longer then 6 months then yes full credits are granted. There's a section on the 12a to advise revenue of this.

It might not be as straightforward as that. She might still be liable to taxation in the other country, also on her Irish income. This will depend on her residency for tax purposes as well as the other country's tax laws and its double-taxation agreement (assuming one exists) with Ireland.

She might need to declare residency in Ireland, as that won't otherwise kick in until the first tax year in which she has spent at least 183 days in Ireland (unsure of exactly how this works). Also the other country's authorities may deem her resident in that country until years after her move to Ireland.

The_Bot

hognef wrote: »

It might not be as straightforward as that. She might still be liable to taxation in the other country, also on her Irish income. This will depend on her residency for tax purposes as well as the other country's tax laws and its double-taxation agreement (assuming one exists) with Ireland.

She might need to declare residency in Ireland, as that won't otherwise kick in until the first tax year in which she has spent at least 183 days in Ireland (unsure of exactly how this works). Also the other country's authorities may deem her resident in that country until years after her move to Ireland.

Irrespective of her residency, general double taxation principles in respect of employment income should mean that Ireland has primary taxing rights on her income if her employer is Irish tax resident or is an Irish permanent establishment (taxable presence) of a foreign employer.

Tax may also be due in her home country but the double tax treaty should operate to prevent any double taxation of the same income. Off hand I can't think of an EU country that Ireland doesn't have a double tax treaty with.

If she hits 183 days in this tax year (year to 31 Dec 2013), then she would be Irish resident and would be entitled to the appropriate tax credits. If non-resident, the entitlement to tax credits is restricted to the proportion of her income taxable in Ireland to her worldwide income. You might find that Revenue will put her on a week 1/month 1 basis until the end of the tax year as a result.

As the above poster says, it is possible to elect for tax residency in Ireland in 2013 but this is only on the basis that the individual intends to, and will be, tax resident in Ireland in the following year.

Note that the standard rate-off (20% band) is not subject to any restriction.