Tommy Broughan (Dublin North East, Independent)
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Question 156: To ask the Minister for Finance his plans to address the ongoing problem of Irish tax fugitives; and if he will make a statement on the matter. [36671/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am assuming that by 'tax fugitives' the Deputy means Irish domiciled individuals or Irish citizens claiming to be non-resident for tax purposes. The taxation of individuals in the State is in line with that prevailing in most other OECD jurisdictions, that is to say:

- individuals who are resident in the State for tax purposes (based on the number of days of presence in the State) are taxable here on their worldwide income; and

- individuals who are not resident here for tax purposes pay tax here only on income arising in the State and on income derived from working here.

A person is regarded as resident in the State for tax purposes in a tax year if he or she spends:

- 183 days in the State in that year, or

- 280 days in aggregate in that tax year and the preceding tax year.

An individual who is present in the State for 30 days or less in a tax year will not be treated as resident for that year unless s/he elects to be resident. As with other areas of taxation, these rules are constantly kept under review.

The Deputy may be aware I made two significant changes in recent years which affected Irish domiciled individuals and Irish citizens claiming to be non-resident. Firstly, I abolished the so-called "Cinderella rule. From tax year 2009 onwards, an individual is regarded as present in the State for a day for tax residence purposes if s/he is in the State at any time during the day. This change makes it harder for individuals to arrange their affairs to become non-resident for tax purposes. Previously, for years up to and including 2008, an individual was treated as present in the State on a day for tax residence purposes only if s/he was in the State at the end of that day.

Secondly, in Finance Bill 2010 I introduced the Domicile Levy, which applies for the tax year 2010 and subsequent years. The levy is payable by an individual who:

- is domiciled in and is a citizen of the State in the tax year (regardless of her/his residence status);

- has worldwide income for the tax year of more than €1,000,000;

- has a liability to income tax in the State for the tax year of less than €200,000; and

- the market value of whose Irish property on the valuation date, 31 December in the tax year, is greater than

€5,000,000.

The Domicile Levy will ensure that wealthy citizens make a contribution to the national finances at this time of difficulty.