Is tax due in Ireland

thecribber

Hope someone can help me out here, My Aunt who is in her late 70s, has lived and works in the USA all her life. She is a dual Irish and US citizen. She has retired now and has moved back to live for good in Ireland. She receives a pension of approx €2000 a month from the United Stated. There is about 10% of her pension withheld in the USA for tax.
I have a few questions
1. Does she need to register for taxation here in Ireland?
2. If she does how much tax will she pay on an Income of €24000?
3. Is there some sort of an amnesty currently which she could avail of?

Thanks in advance for any advice offered

Peregrinus

As an Irish resident, she is liable to Irish tax on her worldwide income and gains.

As a US citizen, she's also liable to US tax on her worldwide income and gains, but as a non-resident of the US she has a significant exemption in respect of non-US income. However her pension, which I presume represents the bulk of her income, is US income.

The end result is that the pension is liable to tax in both Ireland and the US. Fortunately, there's an Ireland/US double taxation agreement which provides relief. If I recall correctly, because she's an Irish resident the DTA provides that her pension is to be taxed only in Ireland. So, she is liable to Irish tax, and she should be able to get her US tax refunded (and arrange matters so that it's not deducted in the future).

(I'm assuming, incidentally, that your aunt's pension is a social security pension. The rules might be different for a pension payed by an employer=sponsored pension plan, and the tax treatment might depend on where the employment was exercised. I'm afraid I'm not really sure how that would work.)

So, the answers to your questions:

1. She needs to make a tax return in Ireland. (As a US citizens, she also needs to make a tax return in the US, but her US tax liablity should be minimal or nil.)

2. Depends on her personal circumstances, but assuming a very simple case, Irish tax on an income of €24,000 would be very roughly €2,300 if she's single, €1,800 if she's widowed, and just €360 if she is married to a spouse of similar age (and the spouse has no income).

3. Why would she need to avail of an amnesty? While she was non-resident in Ireland she had no liability to Irish tax, and if she has only recently moved back she is unlikely as yet to be in default in relation to her obligation to make a tax return.

thecribber

Thanks for your comprehensive reply. You are correct, it's a social security pension. Are there taxation experts in Ireland who could deal with both revenue systems and sort this our for her.