What is Domicile?
Domicile is actually a legal concept derived from caselaw which means that, unlike residence, there is no statutory definition of domicile for Irish tax purposes. Domicile is based on the idea of an individual’s permanent home i.e. the place upon which they see as being their “permanent home” regardless of their residency status at any point in time. There are certain concepts underpinning the location of an individuals’ domicile for Irish tax purposes:
- Domicile of Origin – When an individual is born, they acquire what is known as a domicile of origin. This is generally the domicile of the child’s father at the date of birth (some exceptions such as for a child born out of wedlock).
- Domicile of Dependence– a child retains their parent’s domicile until they come of age. If they then abandon their domicile of dependency without acquiring a domicile of choice, then they take on their domicile of origin.
- Domicile of choice – It is possible to change your domicile and acquire a domicile of choice, however this requires an active intention to change domicile along with physical residence in that territory.
Tips When Considering Movement Across Borders
In the current globalised world, more and more people are travelling across borders, whether for work or for family / personal reasons. For individuals coming to Ireland, even for a temporary purpose, understanding domicile and where they are domiciled is vital.
- When considering where a person is domiciled for Irish tax purposes, it is important to have regard to Irish law
- Days counting, whilst critically important for determining Irish tax residence, is not relevant when considering domicile.
- Citizenship and domicile are not one and the same. Certainly, citizenship is important when considering an individual’s domicile but it is not a de facto determinant
- Whilst it is possible for an individual to have no tax residence, under Irish tax principles an individual will always have a domicile. An individual’s domicile of origin always remains with them even if an individual sheds their domicile of choice.
- Changing domicile can be done, however it requires intention and actual presence in the chosen location. If an individual abandons their domicile of choice but does not acquire another domicile of choice, then their domicile of origin reverts.
- A married couple can each have different domiciles depending on their own backgrounds.
- The longer an individual resides in a jurisdiction and the greater the roots they put down in that jurisdiction the greater the likelihood that they will have acquired a domicile in the jurisdiction.
Final Thoughts
For many people these concepts might appear to be somewhat academic. However, if you are coming to Ireland for a period of time it is important to carefully consider and understand the concepts. Irish resident and non-domiciled individuals are subject to a very different tax regime than Irish resident and domiciled individuals. When filing an Irish income tax return, individuals are required to check the box on their residence and their domicile status. It is very easy to check the box, but understanding the implications of same is critical.
Disclaimer: While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, RBK do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not intended to be an advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.
