Legally avoid income tax in Ireland

Zander1983 · 04-11-2015 04:21PM #1

I want to know legal ways of avoiding personal tax in Ireland. My situation is I work as an IT contractor earning 450 euro per day.

If I work a full month I pay 4,338 euro in tax and my take home is about 5,500 euro. I'm saving for a house and i'm simply not saving enough with the INSANE level of personal tax in ireland on middle income earners. I'm sick of it and simply not having it any longer. As i'm in IT, working from home isn't a problem and i think this gives me some options.

One option is that I rent an apartment somewhere with low income taxes, for example Gibraltor (where i've been and liked - i dont get the bad reputation). I'll then spend 2 weeks per month there and 2 weeks in ireland. Since I'll soend half the year in Gibraltor, i can register for taxes there.

Ill work from my laptop while in Gibraltor - my employer has no problem with this arrangement. Over the course of 2 years, my take home would increase by about 50k.

My questions: can i be taxed in ireland still? Can they still get me for something I havent thought of? Does where you pay tax solely depend on where you live for over half of the year? Does anyone have any other ideas of ho to avoid the insane levels of tax in ireland?

dogsears · 04-11-2015 08:32PM

As someone who pays the insane levels of personal tax in Ireland and can't do anything about it, I've no sympathy for you, but if you really want to pursue an idea like this, pay someone professional to give you advice on it.

L1011 · 04-11-2015 08:58PM

Gibraltar not entirely being in the EU for taxation purposes, the Cinderella Rule no longer existing and other issues could easily crop up. You may need to form a Gibraltar corporation for instance.

450 a day dayrate is not "middle income", its a high income - but its probably not enough to even begin to justify this level of chicanery. Travel costs - with no direct flights - added to the cost of the second house; the generally higher cost of living in Gibraltar due to the difficulty of getting items there, import tariffs, property taxes (far higher than here) and so on; and the wear and tear on yourself from travel means you're unlikely to save anywhere near as much money as you believe you are.

L1011 · 04-11-2015 09:09PM

Also, come to think of it, Gibraltar has residency rules which may require you to rent an "approved" property and actually live in it, come to think of it.

newacc2015 · 04-11-2015 09:20PM

Try Malta. Its in the EU, so no work visa is required. Residency is pretty easy to get. Plus I think income tax is 15% on foreign income.

The main issue is Ireland. I think if you have lived 270 days in Ireland in the last 2 years. You are legally resident in Ireland for taxes.

relax carry on · 04-11-2015 11:10PM

As some others have said seek professional advice if you wish to explore this scheme. I believe you will be disappointed however.

I take it from your post you are registered as a self employed it contractor. While your post provides only a little bit of information I would be a bit more worried about your status as truly self employed rather than imagining some scheme to become a tax exile.

You mention your "employer" rather than client. Do you have more than one client? You may wish to research contract of/contract for, relationships. Also as a truly self employed individual you will have quite a bit of business related expenses to reduce your tax liability. Are you claiming all your business related expenses? What has your accountant/tax advisor recommended to you in terms of tax savings? Maximising Pension contributions etc.

barneystinson · 04-11-2015 11:13PM

I'm no left wing beardy, but 118k is not a middle earner by any stretch of the imagination. I'm sure that safely puts you in the top few % of earners.

Your take home pay is nearly twice the gross average industrial wage. You should be able to save 20k a year on an income like that, and I'd suggest you focus on that, rather than expending huge amounts of time and energy for little real return when all of the costs and all the benefits (financial and otherwise) are stacked up.

retalivity · 04-11-2015 11:18PM

Setup a ltd company, Allows you to claim much more expenses for tax relief, including rent/bills/heat if youve a home office. Can also work out some mileage allowance etc if youre travelling.
There are plenty of companies offering advice and services on the above, id suggest getting in touch with them for professional guidance

OU812 · 04-11-2015 11:22PM

If you're not saving enough taking home €5,500 a month, then you're not trying hard enough. Take stock of what you're spending on & what you can cut back on.

With the assumption that you're currently renting here, you'd still be doing that if spending two weeks out of the month away, right? So you've got double rent to look after as well as flights etc.

I know someone who lives in central Europe & spends two weeks a month here & two there because that's the way his job is set up. He has direct flights between the two places, his car is in the LTCP here (& his other one is in the LTCP there while he's over here) & he stays with a family member while here.

Apart from the cost of the flights & car parking he has no real other expenses, but to him , doing it now a year or so, the biggest cost has been his health from the commute. And he doesn't carry luggage, he's got a wardrobe here & there, simply walks on & off.

it's quite easy to live a very decent life here on €2,500 a month & save the rest. Even cut to ⅔ of that & you'll still be living well.

barneystinson · 04-11-2015 11:36PM

retalivity wrote: »

Setup a ltd company, Allows you to claim much more expenses for tax relief, including rent/bills/heat if youve a home office. Can also work out some mileage allowance etc if youre travelling.

Yeah, that's the advice most of these guys got, and that didn't work out so great for them, I think you're a bit behind the curve on this:
http://www.irishexaminer.com/business/revenue-takes-17m-haul-from-contractors-346864.html

LaGlisse · 04-11-2015 11:52PM

You should give up the coke habit if you are struggling to save on that salary

Immy · 04-11-2015 11:58PM

I don't think your plan would work, with residence rules.

You need to seek specialist advice. There is a reason tax consultants get paid a lot of money, because tax planning is not easy.

AlexisM · 05-11-2015 03:31PM

Zander1983 wrote: »

I'll then spend 2 weeks per month there and 2 weeks in ireland. ...

My questions: can i be taxed in ireland still? Can they still get me for something I havent thought of?

If you are working in Ireland for the two weeks you are here then yes, you will be taxed on half your income. If you are non-resident, you can work in Ireland for an incidental number of days (I think it's 31 days) - i.e. here on hols and just happen to do a bit of work, or here for the odd meeting or two. But if you are working the equivalent of 6 months in Ireland, even if you pass the days rules for non-residency, you will be hit for tax on the portion of work done in Ireland. If you are working fulltime, you would really need to make a clean break from Ireland and be genuinely non-resident for pretty much all your working time - only home at weekends, for holidays etc. with a bit of incidental work.

Have a look at:
http://www.revenue.ie/en/tax/it/leaflets/res1.html

In particular in section 3:
How is the employment income of non-resident individuals treated for Irish tax purposes?
In general, the employment income of a non-resident individual working abroad is not liable to Irish tax. However, such an individual may have a liability to Irish tax on the income attributable to the performance in the State of the duties of that employment.

digzy · 08-11-2015 03:21PM

Zander1983 wrote: »

I want to know legal ways of avoiding personal tax in Ireland. My situation is I work as an IT contractor earning 450 euro per day.

If I work a full month I pay 4,338 euro in tax and my take home is about 5,500 euro. I'm saving for a house and i'm simply not saving enough with the INSANE level of personal tax in ireland on middle income earners. I'm sick of it and simply not having it any longer. As i'm in IT, working from home isn't a problem and i think this gives me some options.

One option is that I rent an apartment somewhere with low income taxes, for example Gibraltor (where i've been and liked - i dont get the bad reputation). I'll then spend 2 weeks per month there and 2 weeks in ireland. Since I'll soend half the year in Gibraltor, i can register for taxes there.

Ill work from my laptop while in Gibraltor - my employer has no problem with this arrangement. Over the course of 2 years, my take home would increase by about 50k.

My questions: can i be taxed in ireland still? Can they still get me for something I havent thought of? Does where you pay tax solely depend on where you live for over half of the year? Does anyone have any other ideas of ho to avoid the insane levels of tax in ireland?

Forget the notion of going abroad....you're not gonna do that.
Speak with an accountant who will give you the best guidance for your unique situation. Just be a bit wary of the 'set up a company' line as its one thing reducing your tax bill, it's another thing altogether getting your money back out.

Marcusm · 09-11-2015 10:35PM

AlexisM wrote: »

If you are working in Ireland for the two weeks you are here then yes, you will be taxed on half your income. If you are non-resident, you can work in Ireland for an incidental number of days (I think it's 31 days) - i.e. here on hols and just happen to do a bit of work, or here for the odd meeting or two. But if you are working the equivalent of 6 months in Ireland, even if you pass the days rules for non-residency, you will be hit for tax on the portion of work done in Ireland. If you are working fulltime, you would really need to make a clean break from Ireland and be genuinely non-resident for pretty much all your working time - only home at weekends, for holidays etc. with a bit of incidental work.

Have a look at:
http://www.revenue.ie/en/tax/it/leaflets/res1.html

In particular in section 3:
How is the employment income of non-resident individuals treated for Irish tax purposes?
In general, the employment income of a non-resident individual working abroad is not liable to Irish tax. However, such an individual may have a liability to Irish tax on the income attributable to the performance in the State of the duties of that employment.

If he/she has been living in Ireland up until now and goes abroad but spends half the time in Ireland, he/she will never lose Irish tax residency. On a stand alone basis, there is a 183 day rule for each year. However, there is an aggregation rule of 270 days over 2 years. On the basis of the proposed living pattern, the OP would remain fully within the charge to Irish income tax for ALL of his/her worldwide income.

sonny.knowles · 09-11-2015 10:49PM

barneystinson wrote: »

I'm no left wing beardy, but 118k is not a middle earner by any stretch of the imagination. I'm sure that safely puts you in the top few % of earners.

I would consider him middle income. Assuming he works 47 weeks x 5 days (52 less 5 weeks total for unpaid bank holidays and unpaid holidays), his gross is EUR 105,750 before any sick leave.

nompere · 09-11-2015 11:56PM

Marcusm wrote: »

If he/she has been living in Ireland up until now and goes abroad but spends half the time in Ireland, he/she will never lose Irish tax residency. On a stand alone basis, there is a 183 day rule for each year. However, there is an aggregation rule of 270 days over 2 years. On the basis of the proposed living pattern, the OP would remain fully within the charge to Irish income tax for ALL of his/her worldwide income.

It's actually an aggregate of 280 days over two years. So spending 139 days per year, every year, in Ireland leaves someone as being non-resident every year.

DmanDmythDledge · 10-11-2015 01:31AM

Ordinarily residence and domicile also needs to be considered. Even if an individual becomes non-Irish tax resident remitting money back to Ireland may expose it to Irish tax.

barneystinson · 10-11-2015 09:18AM

sonny.knowles wrote: »

I would consider him middle income. Assuming he works 47 weeks x 5 days (52 less 5 weeks total for unpaid bank holidays and unpaid holidays), his gross is EUR 105,750 before any sick leave.

Well he'd be in the top 10% of earners at that level of income, so unless your definition of middle extends to very near the top....! :pac:

Mr. Incognito · 11-11-2015 01:08PM

You are asking if there is any legal way to avoid paying taxes.

Yes.

You are asking on an anonymous internet forum being too cheap to pay a professional.

No.

digzy · 11-11-2015 01:11PM

Mr. Incognito wrote: »

You are asking if there is any legal way to avoid paying taxes.

Yes.

You are asking on an anonymous internet forum being too cheap to pay a professional.

No.

TBF It goes on in other threads.....people looking for advice from professionals. some give advice others get in a huff...

munchkin_utd · 11-11-2015 01:17PM

sonny.knowles wrote: »

I would consider him middle income. Assuming he works 47 weeks x 5 days (52 less 5 weeks total for unpaid bank holidays and unpaid holidays), his gross is EUR 105,750 before any sick leave.

the average wage is 33grand in Ireland (look up the dictionary definition of "average" BTW)

this is over 3 times 33grand.
3times the average is not average, its 3 fold higher.

And thats just the average wage. The average income would include folks on the dole or pensions, or if you wanted to be more particular, factor in kids who have zero income and the figure is well below 33k.

Zander1983 · 11-11-2015 01:28PM

Thanks for the advice. Looks like I'm stuck paying these insane levels of tax because leaving Ireland isn't really an option. Talk of 120k a year isn't quite accurate though. I'm a contractor meaning I could be let be let go any time. I also tend to have a few weeks between each contract and I don't get paid for holidays or sick day. So my salary is probably around 80k. The example I gave was a month when I worked a full 22 days - the average days worked per month would be far less.

I don't think there is any point talking to a professional - there is no way around the draconian middle income taxes. I've set up my own company and I do put down expenses here and there but overall, you're saving a few cents here and there while the government take thousands from you each month.

What I'll probably do is work less - it simply doesn't pay to work in long-hour, stressful but well-paid jobs when your'e being taxed nearly 60% of that extra money you're working hard for.

Is there any country in Europe with tax rates we have on middle incomes? I hear about Sweden, France etc but when you get down to the figures, we're the worst.

L1011 · 11-11-2015 01:32PM

Zander1983 wrote: »

What I'll probably do is work less - it simply doesn't pay to work in long-hour, stressful but well-paid jobs when your'e being taxed nearly 60% of that extra money you're working hard for.

Marginal tax rate isn't 60%, or particularly close.

Zander1983 wrote: »

Is there any country in Europe with tax rates we have on middle incomes? I hear about Sweden, France etc but when you get down to the figures, we're the worst.

Try "damn near all of them".

You don't appear to actually know what percentage of tax you're paying to begin with so clearly whatever figures you've done on other countries aren't valid either. Many tax calculators only compare income taxation and not social insurance also - which can be in the mid teens % above income tax in many countries.

And, again - you are on a high income, not a middle income.

Zander1983 · 11-11-2015 01:58PM

L1011 wrote: »

Marginal tax rate isn't 60%, or particularly close.

Try "damn near all of them".

You don't appear to actually know what percentage of tax you're paying to begin with so clearly whatever figures you've done on other countries aren't valid either. Many tax calculators only compare income taxation and not social insurance also - which can be in the mid teens % above income tax in many countries.

And, again - you are on a high income, not a middle income.

I don't get you. I paid 4,338 euro tax last month and took home 5,500 euro per month. How is the marginal rate not "particularly close" to 60%? Are you confusing marginal and effective rate?

Say someone in Ireland is on a salary of 80,000 euro. Find me countries in the EU with a higher rate of tax, with figures to back up it up. I predict the only one to be higher would be Belgium - but then over there you have excellent free health-care, for example.

"damn near all of them" is typically of the socialist nonsense we hear, usually screeched alongside "tax the wealthy".

Read the very well known ibec report debunking your "damn near all" nonsense -> https://www.ibec.ie/IBEC/Press/PressPublicationsdoclib3.nsf/vPages/Newsroom~new-ibec-report-debunking-irish-income-tax-myths-29-09-2014?OpenDocument

L1011 · 11-11-2015 03:27PM

Zander1983 wrote: »

I don't get you. I paid 4,338 euro tax last month and took home 5,500 euro per month. How is the marginal rate not "particularly close" to 60%? Are you confusing marginal and effective rate?

Your marginal rate is not 60%. Its probably not 55% even. Its not particularly close to 60% and you chose that figure to be hysterical with for no good reason and you know that well.

Zander1983 wrote: »

Say someone in Ireland is on a salary of 80,000 euro. Find me countries in the EU with a higher rate of tax, with figures to back up it up. I predict the only one to be higher would be Belgium - but then over there you have excellent free health-care, for example.

Netherlands, all of Scandinavia, very probably Greece after the most recent budget. I can't be arsed going through 27 other countries.

80k in Ireland, takehome 50k (51k from January)
80k in the Netherlands, takehome 47k
Sweden, takehome 48k (despite your previous claims - you didn't actually check "the figures", did you?)

Add in the taxes for being a member of a church in some countries, property tax that would make your eyes water and other indirect taxation (our fuel excise is quite low, for instance) and you really aren't going to come out much better almost anywhere. Some ex-soviet bloc country with no social services of any description might have an effective overall tax rate of a little bit lower on your not-middle-income-at-all salary of 80k but that's about it.

Zander1983 wrote: »

"damn near all of them" is typically of the socialist nonsense we hear, usually screeched alongside "tax the wealthy"

No, its the truth.

Just because someone doesn't have the same tax avoidance desire you have (and actually knows a bit about the subject) doesn't make them a socialist.

Zander1983 wrote: »

Read the very well known ibec report debunking your "damn near all" nonsense -> https://www.ibec.ie/IBEC/Press/PressPublicationsdoclib3.nsf/vPages/Newsroom~new-ibec-report-debunking-irish-income-tax-myths-29-09-2014?OpenDocument

Did you read it? Because it doesn't say that, at all.

Linking to the first thing that looks like it might support your claim is a pretty dumb thing to do, as it shows you don't know what you're talking about or even how to find info on it.

Zander1983 · 11-11-2015 03:47PM

L1011 wrote: »

Your marginal rate is not 60%. Its probably not 55% even. Its not particularly close to 60% and you chose that figure to be hysterical with for no good reason and you know that well.

Netherlands, all of Scandinavia, very probably Greece after the most recent budget. I can't be arsed going through 27 other countries.

80k in Ireland, takehome 50k (51k from January)
80k in the Netherlands, takehome 47k
Sweden, takehome 48k (despite your previous claims - you didn't actually check "the figures", did you?)

Add in the taxes for being a member of a church in some countries, property tax that would make your eyes water and other indirect taxation (our fuel excise is quite low, for instance) and you really aren't going to come out much better almost anywhere. Some ex-soviet bloc country with no social services of any description might have an effective overall tax rate of a little bit lower on your not-middle-income-at-all salary of 80k but that's about it.

No, its the truth.

Just because someone doesn't have the same tax avoidance desire you have (and actually knows a bit about the subject) doesn't make them a socialist.

Did you read it? Because it doesn't say that, at all.

Linking to the first thing that looks like it might support your claim is a pretty dumb thing to do, as it shows you don't know what you're talking about or even how to find info on it.

Im self-employed. The marginal rate of tax I pay is 55%, minimum. I said 60% whihc is 5% off. Hardly hysterical.

First of all, if you earn 80k in Ireland, take home is NOT 50k, its 47k last year, 48k this year - as im sure you know. So straight away we're on a par with Sweden and Nehterlands - which have free healthcare. Want to try that again?

Also in Ireland, as a self-employed person, as I am, you pay PRSI but if you cannot find work, you cannot claim social welfare. Its absurd. So its true what I say - there is nowhere worse in Europe to be earning 80k.

"Some ex-soviet bloc country with no social services of any description might have an effective overall tax rate of a little bit lower on your not-middle-income-at-all salary of 80k but that's about it." - what utter drivel, as well you know. What about Germany, France or the UK (to name but a few), where you will pay FAR less tax on 80k??

L1011 · 11-11-2015 04:03PM

Zander1983 wrote: »

First of all, if you earn 80k in Ireland, take home is NOT 50k, its 47k last year, 48k this year - as im sure you know.

Not for PAYE workers - its 50k Self employed tax is treated differently in most countries (particularly and quite aggressively in France, which you keep mentioning as if its some taxless idyll, actually), and the majority of people are PAYE employees.

Zander1983 wrote: »

So straight away we're on a par with Sweden and Nehterlands - which have free healthcare. Want to try that again?

Netherlands has required insurance, not free. Want to learn the facts first?

Zander1983 wrote: »

"Some ex-soviet bloc country with no social services of any description might have an effective overall tax rate of a little bit lower on your not-middle-income-at-all salary of 80k but that's about it." - what utter drivel, as well you know. What about Germany, France or the UK (to name but a few), where you will pay FAR less tax on 80k??

Germany - takehome 44k. That assumes no church tax. Less than Ireland. Germany has further indirect taxation. 50k if you opt out of social security benefits.

UK - takehome 46k. UK has painful indirect taxation.

Neither of them are less let alone "FAR less". Where are you pulling your figures from?

France - takehome 54k - this is after income tax and social security (the "60k" you'll get on a simple calculator leaves out the social security); but it is before massive local taxation. France resembles the US somewhat in this regard

You are trying to blindly compare topline figures without understanding anything. I suspect you've managed to convince yourself you're being ripped off here when you simply aren't.

relax carry on · 11-11-2015 04:04PM

Zander1983 wrote: »

Im self-employed. The marginal rate of tax I pay is 55%, minimum. I said 60% whihc is 5% off. Hardly hysterical.

First of all, if you earn 80k in Ireland, take home is NOT 50k, its 47k last year, 48k this year - as im sure you know. So straight away we're on a par with Sweden and Nehterlands - which have free healthcare. Want to try that again?

Also in Ireland, as a self-employed person, as I am, you pay PRSI but if you cannot find work, you cannot claim social welfare. Its absurd. So its true what I say - there is nowhere worse in Europe to be earning 80k.

"Some ex-soviet bloc country with no social services of any description might have an effective overall tax rate of a little bit lower on your not-middle-income-at-all salary of 80k but that's about it." - what utter drivel, as well you know. What about Germany, France or the UK (to name but a few), where you will pay FAR less tax on 80k??

I hate this "can't claim social welfare" line always being trotted out. You can't claim jobseekers benefit as you would have had to be paying a higher rate of PRSI for that. You can look to be means tested for jobseekers allowance depending on your circumstances.

Zander1983 · 11-11-2015 04:45PM

L1011 wrote: »

Not for PAYE workers - its 50k Self employed tax is treated differently in most countries (particularly and quite aggressively in France, which you keep mentioning as if its some taxless idyll, actually), and the majority of people are PAYE employees.

Netherlands has required insurance, not free. Want to learn the facts first?

Germany - takehome 44k. That assumes no church tax. Less than Ireland. Germany has further indirect taxation. 50k if you opt out of social security benefits.

UK - takehome 46k. UK has painful indirect taxation.

Neither of them are less let alone "FAR less". Where are you pulling your figures from?

France - takehome 54k - this is after income tax and social security (the "60k" you'll get on a simple calculator leaves out the social security); but it is before massive local taxation. France resembles the US somewhat in this regard

You are trying to blindly compare topline figures without understanding anything. I suspect you've managed to convince yourself you're being ripped off here when you simply aren't.

Ok, Im not sure where you are getting these figures from - it takes about 30 seconds to calculate. If you earn 80,000 euro in the UK (£56514.27), you take home 56764.48 euro (£40,103.98). Where in gods name are you getting 44K?

In Germany its 53.244,15 euro (tax calculator here-> http://www.parmentier.de/steuer/incometax.htm)

Both well above the take home in Ireland. As for indirect taxes - would anyone argue Ireland doesnt have very heavy indirect taxes? And I keep coming back to it - healthcare, thats another chunk out of the takehome. In Germany and the UK, GP's a free. Again, Irelands the worst place in Europe to earn a middle income wage - the facts are right there.

L1011 · 11-11-2015 05:02PM

Zander1983 wrote: »

Ok, Im not sure where you are getting these figures from - it takes about 30 seconds to calculate.

More accurate calculations than your "first result on Google" effort - that are being hampered by finding tax only calculators all the time. If I've made a mistake its off my own bat, not reliance on random websites to tell me numbers that I don't understand.

Zander1983 wrote: »

In Germany its 53.244,15 euro (tax calculator here-> http://www.parmentier.de/steuer/incometax.htm)

That's tax only, and hence completely and utterly useless. Germany has PRSI equivalents, remember.

Zander1983 wrote: »

As for indirect taxes - would anyone argue Ireland doesnt have very heavy indirect taxes?

Compared to the countries you keep trying to compare to, yes, we have quite light indirect taxation. My property tax is €208 a year. Equivalent house the same distance from London could be in the range of £2500.

Zander1983 wrote: »

Again, Irelands the worst place in Europe to earn a middle income wage - the facts are right there.

I think we've comprehensively proven on this thread that its not. Many countries taking higher amounts in direct taxation, far more taking more in total taxation

And why do you keep deluding yourself that 80k is middle income? Its a high income - end of story.

Legally avoid income tax in Ireland

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