I’m going to look at leaving Ireland and Split Year Treatment. It came up in two calls this week. Juan Denver left Ireland in March 2024 for Valencia. He needed help with his Irish taxes. Let’s look at
- Background
- Resident or not
- Split Year Treatment
- Other income
- Zoom AI
- Summary
Background
Juan is from Spain. Married to Juanita and no kids yet. They came to Ireland in 2021. Their monthly rent in Dublin was €1700 for a three-bedroom apartment. He’s an engineer and worked for a Spanish company based here called Dos Cervezas Ltd. Juanita’s in IT and worked for a small local company.
For 2024, Juan is on a salary of €60,000. Juanita’s salary is €78,000. After spending Christmas with family in sunny Andalusia, returning to Dublin in January 2024 was a bit grim. Prices had rocketed, rent wasn’t coming down, and the draw of home was appealing. But the problem was both like their jobs. Juan approached Mary, the HR boss in his company, and said
“All my bags are packed. Ready to go
I’m standing here outside your door.
Oh Mary, I’m leavin’ on a jet plane.
Don’t know when I’ll be back again.
Oh Mary, I hate to go.”
Mary, distraught with such news, kept calm. Juan put on a nice smile as part of his negotiating tactics and said to Mary.
“Oh Mary, why don’t you have some sense.
Please do something to restore my confidence.”
His charm offensive worked. She offered to keep him on the payroll until the end of August. He could work remotely for 6 months. No such joy for Juanita. She would finish her job at the end of February. The Denvers left Ireland on the 2nd of March 2024.
Call with Juan
I had a Zoom call with Juan yesterday morning. I asked him if it was ok to switch on the Zoom AI function to record the call. We’ll come back to that later. Juan was in a panic. He missed a deadline for filing his Spanish tax return. He needed a PAYE Statement of Liability for 2024. His Spanish accountant was looking for it.
Juan tried to file his Irish Tax return on his MyAccount but got stumped by the questions on the first screen. Is he Resident or not?
Resident or Not
Juan’s thinking is that he wasn’t resident in Ireland in 2024. He was only here for 60 days, so how could he be? He wasn’t in Ireland in 2024 for more than 183 days, so he’s not resident under that rule. But he wasn’t aware of the look-back rule. That’s where you look at the days in Ireland in the previous tax year, 2023, and add the days in Ireland in 2024. Once the combined number of days over the two years is greater than 280 days, then he’s resident here in 2024.
There is an out if you spend less than 30 days in Ireland in a tax year. Say he spent 28 days in Ireland in 2024 and was here for the full year in 2023. Even though the total days, under the look-back rule, exceed 280 days, he still isn’t resident here in 2024 because of being here for less than 30 days.
So, he’s resident in Ireland in 2024 under the look-back rule.
Split Year Treatment
You can claim split-year treatment on your employment income when leaving Ireland, once you are
- Resident in the year of departure and
- Not resident in Ireland the following year
In the year of departure, you pay tax on all your employment income in the normal way. But your foreign employment income from the date of departure is ignored for Irish taxes. You will receive full credits and lower rate band for the full year, even though you are only here for part of the year.
SYT treats you as not being resident from the date of departure for employment income. Likewise, with the date of arrival into Ireland. The employment income you earn before coming to Ireland is ignored, and you are resident from the date of arrival. For the year of arrival, you pay tax on your Irish employment income to the end of the tax year. But you get a full year’s lower rate band and tax credits.
To get SYT in the year of arrival, you will
- Move to Ireland during that year and
- You are going to be resident in the next calendar year
The result of this is that you could be in a tax refund position in the year you leave. The reason is that your tax credits and lower rate band are spread evenly over the year. If you are only here for a few months, then you have unused credits and lower rate band. I’ll run some numbers for the Denvers to show you.
The Numbers
Remember that Juan is on a salary of €60,000 and Juanita is on €78,000. For 2024, their tax credits and lower rate band are split equally. Both have a €42,000 lower rate band and have tax credits of €3,750. Juan stayed on the Irish payroll until the end of August. Juanita finished at the end of February, so she had two months’ pay here. Their Irish salaries and taxes deducted for 2024 are
| Juan’s Salary | €40,000 |
| Taxes deducted | €7,900 |
| Juanita’s salary | €13,000 |
| Taxes deducted | €3,175 |
When we do their tax computation for their Irish Tax return, they get the full lower rate band and credits. Their computation for 2024, using split-year treatment, looks like this
| Income | €53,000 |
| Tax at 20% | €10,600 |
| Less Tax Credits | |
| Married | €3,750 |
| PAYE X 2 | €3,750 |
| Tax Liability | €3,100 |
| Tax Paid | €11,075 |
| Tax Refund | (€7,975) |
So, a very nice chunky tax refund is owed to the Denvers.
USC
Likewise, there can be a refund of USC, as the USC rate bands are split over the year. I won’t bore you with the numbers but if we look at Juanita alone, she’ll have paid USC for the first two months of 2024. But as her total income didn’t exceed €13,000 in 2024, she has no USC liability. As a result, she’ll be in a refund position for USC too.
Other Income
You can’t get SYT on other income, like rental income or income from an office, like a salary for a company director. Say you leave Ireland in 2025 and rent out your house. You’ll pay tax here on the full rental profit for 2025, but you can still claim SYT on your employment income. For those leaving with a rental property, they’ll need to follow the NLWT rules
About that last point, I had a call with Tom, who had emigrated a week ago to New Zealand. We agreed to act as a collection agent for him to make the monthly rental notifications and process the tax payments.
Recent Changes
Recent changes are afoot when it comes to claiming SYT. Up to the end of 2024 the taxpayer, whether leaving or arriving, was to contact Revenue to claim the relief. An in-year claim as such.
From 1 January 2025, this has changed. If you are leaving or arriving in 2025, you can claim the relief when filing your tax return for that year. You will file that return in 2026 by the 31st of October of that year.
Zoom AI
As part of my call with Juan, I asked if it was ok to switch on the AI function of Zoom. I mentioned keeping personal information like his address, PPS number, and DOB out of the conversation. I tried this recently with another client and was blown away by the summary I got back. When you meet someone first you try and get to know them a bit, so they are comfortable. That works best when you are asking them personal questions and sensitive information. A few minutes to get to know you and build some trust.
A typical Irish man will talk about sport and the weather to find common ground. Below are some of the details that Zoom AI sent back to me by e-mail after the call.
Quick recap
Colin and Juan discussed their travel experiences and plans, including the current heat wave in Valencia and Colin’s recent trip to Croatia. They explored the use of AI for transcribing their call and capturing action items. The conversation then focused on Juan’s work situation, his move from Ireland to Spain, and the process of completing his Irish income tax return for 2024. Colin offered guidance on obtaining the necessary statement of liability.
Next steps
- Juan to obtain his Employer Detail Summary from the Irish Revenue website.
- Juan to get the Statement of Liability for 2024 from the Irish Revenue website.
- Juan to complete his income tax return for 2024 in Ireland.
- Colin to assist Juan in navigating the Irish Revenue website to access the necessary documents.
- Colin to guide Juan through the process of filling out his income tax return for 2024.
Getting that summary and action points saves time. Of course, it’s important to check that the information is correct. The summary can be emailed to the client, and everyone knows the action points and next steps.
So, AI isn’t coming. It is here. We’ll all be using it in the coming months and years, if we are still needed! I asked Juan how he found us, and he said he put what he was looking for into Chat GPT, and we were one of the suggested firms.
Summary
Leaving Ireland and Split-Year treatment worked out well for the Denvers. I have changed the names and numbers for the blog, but they were due a refund of over €4,000. We filed their 2024 tax return, so their statement of liability will issue shortly. Although that depends on Revenue. He will have his 2024 statement of liability so he can sort his Spanish tax return.
He went from worry to good vibrations. Walking on sunshine by the end of the call.
Need help with your taxes when leaving Ireland? If so, start here
