Investment Advice for Irish Expat

tomaschonnie

Hi, I think this is the perfect place to get advice for my specific situation...

I'm Irish but living in Vietnam for past 6 years. I work there and pay tax there. I have an Irish AIB account; not much in it though. I have saved about 70K (in local currency, Vietnam Dong) working here. It's time to get that money somewhere safer than the banking system here; in the long run, it's not safe and inflation is a worry.

My initial idea was to contact a financial advisor specializing in expats, but his advice wasn't really up to scratch and the fees were high. So, now what I'm thinking is to send the money back to my irish bank account and then invest it using Degiro in broad-based passive ETFs.

Does this sound like a good plan? What potential problems do you see? Am I still liable for tax even though I'm not resident in Ireland?

troyzer

You'll need to find out if Ireland and Vietnam have a double taxation treaty first.

troyzer

Which, lo and behold, they do.

Here it is:

http://www.revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/v/vietnam.pdf

Have a very close read of that before doing anything. It'll tell you the full tax implications of shifting money around and where you pay tax on gains.

tomaschonnie

troyzer wrote: »

You'll need to find out if Ireland and Vietnam have a double taxation treaty first.

yeah they do.. http://www.legislation.ie/eli/2008/si/453/made/en/print

troyzer

tomaschonnie wrote: »

troyzer wrote: »

You'll need to find out if Ireland and Vietnam have a double taxation treaty first.

yeah they do.. http://www.legislation.ie/eli/2008/si/453/made/en/print

Well have a read and see where it leaves you tax wise. What you actually do with your investment is up to you. I think you're right that low fee indices and ETFs are the best way to go though.

tomaschonnie

I think I found the two relevant sections. I think it says that I pay tax in Vietnam, 10% if I'm not mistaken.

Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
   a. 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 70 per cent of the voting power of the company paying the dividends;
   b. 10 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, and includes any income or distribution assimilated to income from shares under the taxation laws of the Contracting State of which the company paying the dividends or income or making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State shall be exempt from tax in the firstmentioned Contracting State. For the purposes of this paragraph, the term "Government" means:
a. in the case of Vietnam:
   i. the State Bank of Vietnam;
   ii. the Bank for Investment and Development Support;
   iii. any body or institution wholly or mainly owned by the Government of
Vietnam as may be agreed from time to time between the competent authorities of the Contracting States;
b. in the case of Ireland:
   i. the Central Bank of Ireland;
   ii. the National Treasury Management Agency;
   iii. the National Pensions Reserve Fund; and
   iv. a statutory body or any institution wholly or mainly owned by the Government of Ireland as may be agreed from time to time between the competent authorities of the Contracting States.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures as well as all other income assimilated to income from money lent by the laws of the State in which the income arises but does not include any income which is treated as a dividend under Article 10. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the debt-claim in respect of which the interest is paid is effectively connected with (a) such permanent establishment or fixed base, or with (b) business activities referred to under subparagraph (c) of paragraph 1 of Article 7. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

troyzer

I think article 10 means that basically you're going to be taxed 10% on dividends in Ireland before it can be remitted back to Vietnam where it will then be taxed again. However, if you still have business interests in Ireland you'll only be taxed once? Article 11 looks much the same for interest. 

That seems to be my reading anyway. But to be honest, would you really be looking to remit your interest? I presume the point of this is to build up a nest egg. Rolling over your dividends and interest probably won't incur any tax at all.

tomaschonnie

Yes, precisely! it's about building up a savings fund. I really hope this analysis is correct. I will try to get some professional advice on this too, but thanks so much for taking the time to read.

I'm thinking of using Degiro as the fees seem to be so low.

troyzer

tomaschonnie wrote: »

Yes, precisely! it's about building up a savings fund. I really hope this analysis is correct. I will try to get some professional advice on this too, but thanks so much for taking the time to read.

I'm thinking of using Degiro as the fees seem to be so low.

No problem. You should definitely seek professional advice though. Unless you're paying for advice, the person giving it is either guessing (like me) or trying to sell you something (like a ****ty annuity product).

AlexisM

troyzer wrote: »

I think article 10 means that basically you're going to be taxed 10% on dividends in Ireland before it can be remitted back to Vietnam where it will then be taxed again. However, if you still have business interests in Ireland you'll only be taxed once? Article 11 looks much the same for interest. 

That seems to be my reading anyway. But to be honest, would you really be looking to remit your interest? I presume the point of this is to build up a nest egg. Rolling over your dividends and interest probably won't incur any tax at all.

Why would he be taxed on dividends in Ireland?  He is not resident in Ireland, nor ordinarily resident as he has been away for more than 3 full years.  Degiro is not based in Ireland so, provided he does not buy assets that are considered 'Irish' assets, I would have thought there should be no liability in Ireland for income or capital gains tax?  
Once you are not resident nor ordinarily resident, I thought the only taxes due in Ireland are capital gains on certain Irish assets and tax on income earned in Ireland?  
Does the money going to Degiro via his Irish bank account affect this?