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Compensation from abroad and taxation

  • 27-02-2017 6:00pm
    #1
    Commotion Ocean
    Closed Accounts Posts: 552 ✭✭✭


    Hypothetical thread:

    Say for example I'm traveling around New York on holidays and an object falls from a scaffolding three or four stories up and hits me on the head or back, thus causing permanent damage.

    If the construction firm offered me one million dollars to shut up and walk away and not sue, and I return to Ireland. Would I have to pay tax on that compensation that was awarded outside the jurisdiction of the Irish courts? Would I even have to bother declaring it to revenue?

    Just curious :p


Comments

  • #2
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Court Awards are exempt from tax in Ireland.

    I dont know what the situation in the US is. You wouldnt have to declare it to Irish Revenue but you might have to pay US Tax on it.


  • #3
    brian_t
    Registered Users, Registered Users 2 Posts: 6,790 ✭✭✭brian_t


    Mr. Incognito wrote: »
    Court Awards are exempt from tax in Ireland.

    I dont know what the situation in the US is. You wouldnt have to declare it to Irish Revenue but you might have to pay US Tax on it.

    Just to point out that OP was not about a Court award. The payment was from the company in order to avoid involving the court.
    Commotion Ocean wrote: »
    If the construction firm offered me one million dollars to shut up and walk away and not sue,


  • #4
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,998 ✭✭✭✭Peregrinus


    Settlement of a potential claim for damages is not taxable if an award of damages, had the claim not proceeded, would not be taxable.

    This happens all the time when you are involved in a car accident and it's the other guy's fault. Typically, if the facts are clear, his insurance pays and the matter never goes to court. What you get from his insurer in these circumstances is not taxable.


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