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Tax on Foreign ETF for someone returning to Ireland

  • 09-05-2020 7:50pm
    #1
    dancarter8
    Registered Users, Registered Users 2 Posts: 15 ✭


    Hi,

    I am currently a tax resident of Canada (born in Ireland, moved to Canada 8 years ago).

    I bought some Canadian domiciled Vanguard SP500 ETF (VSP) a few years back.

    I am looking at moving back to Ireland permanently and had a question on how Ireland calculates the Capital Gains tax?

    Does Ireland calculate the capital gains on the cost base of the asset (fair market value) on the date a person arrives/becomes resident in Ireland (or on the original purchase price?)


    Thanks


Comments

  • #2
    tanit
    Registered Users, Registered Users 2 Posts: 325 ✭✭tanit


    dancarter8 wrote: »
    Hi,

    I am currently a tax resident of Canada (born in Ireland, moved to Canada 8 years ago).

    I bought some Canadian domiciled Vanguard SP500 ETF (VSP) a few years back.

    I am looking at moving back to Ireland permanently and had a question on how Ireland calculates the Capital Gains tax?

    Does Ireland calculate the capital gains on the cost base of the asset (fair market value) on the date a person arrives/becomes resident in Ireland (or on the original purchase price?)


    Thanks

    You will pay taxes based on the original purchase price, but you will get a credit for any taxes paid in Canada for the equivalent to CGT they have over there.

    You might want to clarify with Canadian authorities when you will be considered non-resident for tax purposes and consider the same point about residency in ireland when you do disposals, plus whatever technicalities go with ETF and taxation of foreign assets/property.

    You might want to either talk with Revenue or a tax accountant that specialises or is familiar with DTT


  • #3
    dancarter8
    Registered Users, Registered Users 2 Posts: 15 ✭dancarter8


    tanit wrote: »
    You will pay taxes based on the original purchase price, but you will get a credit for any taxes paid in Canada for the equivalent to CGT they have over there.

    Thanks for the info .. so if I have a deemed disposition (capital gain tax) applied on departure from Canada .. I should be able to claim a tax credit in Ireland for that capital gain tax paid to Canadian Revenue Agency when I eventually sell the ETF's when resident in Ireland


  • #4
    tanit
    Registered Users, Registered Users 2 Posts: 325 ✭✭tanit


    dancarter8 wrote: »
    Thanks for the info .. so if I have a deemed disposition (capital gain tax) applied on departure from Canada .. I should be able to claim a tax credit in Ireland for that capital gain tax paid to Canadian Revenue Agency when I eventually sell the ETF's when resident in Ireland

    In theory yes, but I will recommend you to call Revenue and talk with them, alternatively you can contact a tax advisor that specialises on these issues.

    If you don't want to talk with the tax advisor at the very least call Revenue and ask them how it would work in your case and what kind of information and documents you would need to keep for any future disposals you effectively do on the ETF. There are issues regarding residency (you are not right now under the scope of CGT in Ireland even though you are domiciled) that affect your situation that make it a bit more complicate and it is going to save you a lot of headaches in the future if you get the right advice right now.


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