Revenue E-Brief Issue 3, 15 January 2009
The Finance (No.2) Act 2008 provides that, for the tax year 2009 and subsequent tax years, an individual shall be deemed to be present in the State for a day if the individual is present in the State at any time during that day. (Previously, it was necessary for the individual to be present in the State at the end of the day in order for that day to count for tax residence purposes.)
In the practical operation of the new rule, Revenue will apply the following treatment:
An individual will not be regarded as being present in the State for any period during which he or she arrives in, and departs from, the State and throughout which he or she remains “airside” – that is, remains throughout the period in the State in a part of an airport or port not accessible to members of the public (unless, of course, such members of the public are arriving in, or departing from, the State).
Where an individual is prevented from leaving the State on his or her intended day of departure because of extraordinary natural occurrances (for example, sudden and severe adverse weather conditions) or an exceptional third party failure or action (for example, the breakdown of an aircraft or a labour strike) – none of which could reasonably have been foreseen and avoided – the individual will not be regarded as being present in the State for tax residence purposes for the day after the intended day of departure provided the individual is unavoidably present in the State on that day due only to ‘force majeure’ circumstances.
Mr. Brown intends to depart from the State at 6 pm on January 20th. However, due to unanticipated and severe adverse weather conditions, his flight is delayed until 4 pm on January 21st. In this instance, Mr. Brown shall be treated as present in the State on the 20th but shall not be treated as present in the State on the 21st.
Ms. Black intends to depart from the State at 6 pm on February 10th. However, due to unanticipated technical difficulties with the plane, her flight is delayed until 4 pm on February 11th. In this instance, Ms. Black shall be treated as present in the State on the 10th but shall not be treated as present in the State on the 11th.
The new rule in the Finance (No. 2) Act 2008 may give rise to some additional situations where an individual may become “double resident” for a particular tax year. Where a person is resident in the State for a tax year and is also a resident in a country with which Ireland has a tax treaty (under the laws of that country) for the same tax year, the operation of the standard “tie-break” provision in the tax treaty will ensure that the individual is deemed for the purposes of the treaty to be a resident of only one of the countries.
Mr. White is tax resident in the UK, where he has his permanent home and his main business interests. He also has some subsidiary business interests and a holiday home in Ireland. When he flies to Ireland for business meetings he often returns on the same day. Prior to 2009 those same-day visits did not count for residence purposes under Irish tax law.
Mr. White is present in Ireland for more than 183 days in 2009 – because his same-day visits are now counted under Irish tax law for residence purposes and he has spent extended periods at his holiday home. But he is also resident in the UK for the same year because of the operation of UK tax law. Under the tie-break rule in the Ireland-UK double taxation treaty, Mr White will be treated as a resident only of the UK because his personal and economic relations (his centre of vital interests) are closer to the UK than Ireland.