Personal income tax returns and foreign income

Cole

Hi folks. If someone started living and working in the UK during a tax year but happened to spend the first month of that (new) employment working remotely online in Ireland, should that be mentioned or not in Irish tax returns? Including that 1 month as resident in Ireland (rather than just lumping it all together and indicating it was all earned while resident in the UK) would make the difference between being 183 days resident in Ireland or not. I understand how that affects your PRSI/voluntary contributions status and that's not an issue, but I just wonder if getting into minutiae like that could end up complicating anything else?

I mean how would anyone (Revenue) know any differently, unless you tell them?

Asking for a friend...

Taxes

A quick scan through your bank accounts(domestic and foreign) would probably be sufficient enough to determine if you were in-situ in Ireland during the period in question or not.

A confirmation check to your employer that all your employment duties were exercised in the UK, ensuring your employer had no shadow payroll obligations in Ireland.

You must have had the use of a dwelling while you were in the UK working for the month in question, they might ask you to furnish associated bills.

It wouldn’t be difficult for a Revenue official to determine the facts and circumstances of a case such as this.

However the chances that they’d bother going to these lengths may be slim. Like any good organisation they have to ensure their resources are utilised optimally.

Cole

Thanks for the comprehensive comment. I'm inclined to agree with the last point. I always do things by the book...nothing to hide...but I sometimes have doubts when dealing with Revenue that being completely honest could actually backfire in reality and you might have to jump through more hoops to deal with that one bloody month. It' seems like an extremely minor thing. Does declaring that one month's income (paid into a UK account) while resident in Ireland actually lead to any kind of re-categorisation/paperwork/complications etc.?

Thanks

Taxes

Well employment income is taxed at source and so it is your employers responsibility to deduct and remit tax to the relevant tax authority, so it would be they who would be potentially accountable.

But here is why the tax authority may be interested in taxing the income:

The rule of thumb is that employment income will be taxable in the country in which it is exercised, regardless of the residency status of the individual. There are some exceptions to this rule, short-term business visits and secondments, cross-border workers relief etc.

So, provided you don’t fall under any exceptions, Ireland would be entitled to claim primary taxing rights over that income.

However you should refer to the UK/Ireland double tax agreement. An exemption applies where a resident of one state, exercises employment in the other, provided the individual does not spend more than 183 days in that other state and is not paid by an employer or permanent establishment in that other state.

note this relief applies to the resident of a state whom exercises their employment duties temporarily in the other.

What is your residence status?

Resident in Ireland on the two-year look back rule

Resident in the UK as you have spent more than 183 days this year.

Dual resident per the tax laws of both domestic states - apply the tie-breaker provisions per the treaty to determine jurisdiction of residence for double tax treaty purposes.