The Irish non-dom status, short for non-domiciled status, is one of the best tax planning opportunities in Europe for location independent entrepreneurs and remote workers. In this post, I explain how it works and detail how to apply.
What is non-dom
Domicile is not automatic and is not a status you can apply for. It is determined on a case-by-case basis and relies heavily on case law and circumstances. Where you were born, where your family lives, where your center of economic interests is, where you bank and hold your assets etc are all factors taken into consideration. It is also important to understand that while it is technically possible to be a resident of nowhere, it is impossible not to have a domicile. Even stateless individuals have a domicile.
A non-dom individual is a resident of the country issuing the status, but is not deemed to be domiciled there. Here is an example illustrating this:
John is a Chilean citizen. He spends eight months every year in Ireland, long enough to qualify him as a tax resident. John derives all his income from his business back home in Chile, he also owns a house there. John has no plan to permanently settle in Ireland. Because of this and his ties to Chile, John is considered to be domiciled in Chile for tax purposes, while a non-dom tax resident in Ireland. He is thus taxed on his worldwide income by Chile while Ireland only taxes John on his Irish-sourced and remitted income.
With proper structuring in place, non-dom status can be used to live in high tax countries such as Ireland tax-free or nearly so. It also represents an interesting arbitrage opportunity when it comes to claiming tax treaty benefits. For more details and examples, read the residency section of the Freedom Surfer Course.
Ireland non-dom, the details
If you qualify for tax residency in Ireland (see the Revenue site for more details), but have your domicile in another country, and proof to support this claim, you can file in Ireland as a non-dom resident.
The way this works is simple, you must file a self assessment return on which you report your assessable income, the same way a “normal” Irish tax resident would, but unlike a normal Irish tax resident, your assessable income will only be your Irish and remitted income. Make sure to tick the non-domiciled box on your return.
Assuming that Revenue accept your claim, you will only pay Irish tax on your Irish sourced income, and remitted income (foreign income brought into Ireland).
Do note that you may have to pay the domicile levy if you meet the requirements outlined here.
While the Ireland non-dom program may seem nearly identical to the UK’s, a major distinction is the lack of a time-based levy. In the UK, you must pay a levy if after a number of years as a non-dom resident while in Ireland you can claim non-dom status indefinitely without penalties.