Running the Clock and becoming non-res..

TaxExileTrainee

Hopefully I'm posting in the right forum. Long term boards user with a new profile for this one..

I received a bit of a windfall lately and I'm seriously considering running the clock and moving away for a few years. I'd be moving without family (youngest is 9) with them visiting school hols / weekends etc. to wherever I base myself.

Not looking for tax advice as I'm fully loaded up already with that but more interested to hear from anyone that has gone this route and what the experience has been like.

Thanks

2ndcoming

Is this Bill Badbody?

TaxExileTrainee

https://www.boards.ie/discussion/comment/119880548#Comment_119880548

Nope.

the_amazing_raisin

Sounds like an excellent way to end up getting divorced and despised by your family, can't imagine your kids and OH would be too happy about your plan

TaxExileTrainee

https://www.boards.ie/discussion/comment/119880941#Comment_119880941

Thanks for that. Was that your experience ? For me, right now, everyone is pretty excited about the opportunity that this presents for us all.

Really interested to hear from anyone who has done it.

HeidiHeidi

What does "running the clock" mean?

Why would you want to move away from your family for a few years? If it's a tax-saving/avoiding measure (running the clock suggests that to me, whatever it means), it's a fairly extreme one!

TaxExileTrainee

https://www.boards.ie/discussion/comment/119880973#Comment_119880973

Sorry - by 'running the clock', I mean spending sufficient time outside of Ireland in order to become non-tax resident and non-ordinarily resident.

Fairly extreme = yes, hence looking for some real world experiences.

Thanks

Bass Reeves

https://www.boards.ie/discussion/comment/119880973#Comment_119880973

It obviously a substantial inheritance/ windfall. The difference between Ireland and Italy on something like this could be anything from 2-300k on a sum sub a million. I know the previous owner of Kingspan went to Italy to avail of a difference tax regime in the late noughties.

I am also presuming that OP has all the tax advice received already of when he has to exit to avail of this tax avoidance. It's is something anyone would have to consider if the sum involved was substantial enough.

This is not really an option for a sub 100k situation and from 1-150k it might be borderline above that it is something amy same person would have to look at.

It must be a significant sum if the tax saved is going to offset supporting your family at home and setting up a new life in a foreign country. Enjoy it OP.

Allinall

If the OP has already received the windfall, then any tax will be due, and no amount of running clocks will negate the liability.

TaxExileTrainee

https://www.boards.ie/discussion/comment/119881006#Comment_119881006

https://www.boards.ie/discussion/comment/119881008#Comment_119881008

Cheers for that both. You are of course dead right. The saving is significant and far outweighs the travel / accommodation / living costs of living abroad for a few years. Hence the consideration and interest in hearing real world experiences.

Xander10

https://www.boards.ie/discussion/comment/119881020#Comment_119881020

Exactly, was just about to post same

TaxExileTrainee

https://www.boards.ie/discussion/comment/119881020#Comment_119881020

https://www.boards.ie/discussion/comment/119881030#Comment_119881030

You are both absolutely correct and in fairness in my opening post I said that I'd received it. I haven't received it personally - it's in my holdco that I intend liquidating, once I've attained non-res + non-ord-res status.

In the wind

@TaxExileTrainee, congratulations on your impending windfall.

I considered a similarish model but in a somewhat reverse manner a few years ago & ultimately decided to stay with the family which worked out well in hindsight.

If your impending windfall is really substantial then I'd be asking myself whether the CAT I'd be liable for in Ireland would really put such a significant dent into the windfall that it'd be seriously undermined. Not sure if I put that well but consider the following:

Lets say your windfall is EUR5 million & you lifetime CAT allowance is fully intact & your allowance for this particluar inheritance is the max allowed (EUR335,000).

5,000,000 -335,000 = 4,665,000 liable for CAT at 33%.

4,665,000 * 0.33 = 1,540,000 tax liability.

5,000,000 - 1,540,000 = 3,460,000 into the paw after Irish taxes are paid. Put in your own numbers but I would not be leaving my family for 3 years to avoid a CAT bill of 1.54 million when I could have 3.46 million in the paw in the intervening 3 years.

Further the higher your windfall number the more you should be leaning towardstaying with the family as you will have a greater abundance of cash in the paw after taxes are paid.

Even further as you have extraordinarily larger quantity of money to hand your lifestyle will change, perhaps you'll quit work & take up some less than homely habits while your off in your Taxen haven flying solo - this can have a devastating effect on family life & no amount of cash can buy back a happy family.

Best of luck whatever you decide, do let us all know.

I'd stay with the family.

TaxExileTrainee

https://www.boards.ie/discussion/comment/119881319#Comment_119881319

Really appreciate the reply there, ITW. Decisions, decisions !

Bass Reeves

https://www.boards.ie/discussion/comment/119881319#Comment_119881319

I think at the figure of 5 million I be carrying the family with me. I think it's 24 months you have to spend away. It may be 36. But at 500-750k/ year I be taking the family with me unless the children were at critical education years.

However have seem lads abroad over the years it really depend on the mentality of the individuals both the person going and the spouse at home. I think you are allowed back in Ireland so long during the.year. It important to time this so that you take the maximum pressure off your spouse.

Depending on she works at it may be possible for her to take a career break for the summer holidays periods and come out with the children for extended period.

If the children are old enough they may be able to fly by themselves and come out to you at midterms and Easter.

Biggest issue is what you plan to do while out there. Will you be able to work in your career area out there. I presume it's Portagul, Italy or elsewhere in Europe you are going to not to the Bahamas..

Biggest issue can be companionship especially for the person by themselves. Often the spouse at home with the children can not understand this and it can become an issue. After 4-6 weeks out in any country you will become bored visiting sites, golfing or going for walks.

Have you considered what you will do. Any job no matter how menial will eat time for you. Even though you do not need the money it prevents boredom.

The other risk is either person will meet someone else. Straying is one issue but a relationship is a whole different ballgame

TheWonderLlama

you're still allowed 90 days per annum back here and if family can come to you for holidays, etc, its not all bad.

Try not to run the residence days to the absolute edge as you never know when you might need a few extra for an emergency.

Revenue will scrutinise the arrangement very carefully as they hate to lose out on a chunk of money. What is your motive for moving abroad? If it is just for the purpose of tax avoidance, then they will slap you with an anti-avoidance decision, which is not time limited, could be 5 years, could be 40. Is it worth it to not have to panic every time a letter with a harp drops in the door?

Other considerations, you would have to inform your bank. some of them don't allow non-residents to hold bank accounts. Mortgage might be a tricky one.

Remittance of funds, how is the family going to live while you are away? If you send money back, it will be taxed.

taxation in your host state, how does that work? if its where i think it might be, you might have to pay tax on the income generated, which is fine, but you should make sure there are no other nasty surprises in that country.

ohnonotgmail

https://www.boards.ie/discussion/comment/119882161#Comment_119882161

up to 182 days in a tax year, or 280 days over the course of the previous 2 years, and you are non-resident.

TheWonderLlama

Revenue used to deem someone staying over 3 months in any year to be "habitually resident" and especially if they have a house available to them. Teh Denis O'Brien residence case is a good example of that. Best to be safe.

Bass Reeves

https://www.boards.ie/discussion/comment/119882183#Comment_119882183

I think that is only where you have been abroad a few years. I am sure OP has all this clarified with his accountant

ohnonotgmail

https://www.boards.ie/discussion/comment/119882459#Comment_119882459

I certainly hope so :)

Updated comment

Bass Reeves

https://www.boards.ie/discussion/comment/119882553#Comment_119882553

https://www.boards.ie/discussion/comment/119882491#Comment_119882491

OP said in the first post that he has received tax advice already and is overloaded with it in his own words

TaxExileTrainee

Thanks for all the advice here - most particularly @TheWonderLlama and @Bass Reeves - plenty of food for thought. Re the tax side of things, tax advisors are pretty on the ball and have advised extensively here, so based on all the moving parts in my own circumstances, I'm on pretty certain ground as to where I stand. (FYI @brenbrady it's CGT for me and most likely final destination of either Portugal, Malta or Italy).

My interest from my OP is in the lived-experience side. Has anyone done it and how did they get on ?

Much appreciated to all contributors to date.

homingbird

He can cover the days he stays here by flying into ireland via belfast then either get a train down or hire a car as there is no border anymore so no passport needs to be stamped so no one knows he is in the country & portagul give a 6 year tax break if you invest so many 100k in the economy of the country like buying a house.

Bass Reeves

https://www.boards.ie/discussion/comment/119883225#Comment_119883225

When you are avoiding tax the last thing you want to do is make a mistake. The Irish revenue commissioners watch everything. Use the wrong credit card, pay the wrong bill etc they will catch you. I imagine they can access flight records in& out of Belfast

growleaves

https://www.boards.ie/discussion/comment/119882710#Comment_119882710

Sorry I do not have any experience of this. But I'm wondering why don't you just bring your family with you?

The family separation seems like a mistake to me, that is just my intuition speaking.

In the wind

Regarding your haven of choice check out Nomad Capitalist on YouTube. He has good insight into pros and cons of the destinations you mentioned above.

Peregrinus

Well, hold on. 

Using the name “TaxExileTrainee” and posting in the taxation forum, the OP tells us that he intends to move abroad for a number of years to avoid incurring Irish tax liabilities. 

Unsurprisingly, he receives lots of queries about his tax issues, and lots of advice about, variously, CGT and CAT. 

But that’s not what he’s looking for. He tells us that he’s got actual proper tax advice from actual proper tax advise with actual proper qualifications that he can rely on; he doesn’t need, and isn’t asking for, tax advice from randos like us. A very sound attitude, I may say.

What he actually wants is people’s thoughts on the experience of living abroad while his spouse and children remain in Ireland. He is not asking about the financial aspects of this; he is already satisfied that the tax saving will cover the costs of running two homes and the travel and other expenses he will incur living like this.

So he’s asking about lifestyle issues. What’s it like, living apart from your children? What’s it like, going suddenly from being a family man in the country you grew up in to being a single man in a country where you have no family and minimal or no social network, and may not even speak the language?

Stressful, I would think, is the answer, and it’ll be the kind of stress that money and a mediterranean climate can do only a limited amount to assuage. And not just for you, but for your spouse and children. So think long and hard and be satisfied that the financial rewards of doing this justify the very considerable downside. 

It’s not the kind of issue that gets discussed very in the taxation forum, which makes me think that the OP’s choice of username and choice of forum was maybe not optimal. The fact that this query is tax-driven is actually irrelevant to the questions the OP is asking. The issues he faces are most likely to have been experienced by others who endure family separation - expatriate workers, prisoners, and (as regard separation from children) the divorced. Maybe post this query, with irrelevant tax information omitted, in the Family or Parenting forums?

TaxExileTrainee

https://www.boards.ie/discussion/comment/119884519#Comment_119884519

Sage advice there @Peregrinus and you really get to the nub of the issue above. It boils down to 4.63mths/yr at home and if it can be made work from a family perspective. Three of them are at uni and one is still in primary school so it's the little one that I'd have most concern about. Part of me is thinking it'd be no different to someone working for a multinational where they are gone M-F but equally I certainly wouldn't want to 'devastate', as one poster put it, my family life for the sake of money. With a super supportive spouse, we're trying to look at it as an adventure to be honest and seeing if we can make it work - hence the original post looking for the lived experience type advice - and yes, very probably should have been posted in a different forum. Much appreciated once again to all contributors above.

TaxExileTrainee

https://www.boards.ie/discussion/comment/119883225#Comment_119883225

Not dissing what you are saying, you could do that - but to be honest I'd put it in the category of messin'. My view is that if I'm doing it, it'll be by the book as the last thing I'd want is to be looking over my shoulder. Tax people have mentioned people getting caught out on toll roads with tags, credit cards being used and even one which I didn't fully believe on mobile phones being tracked.