Noel Ahern (Dublin North West, Fianna Fail)
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Question 116: To ask the Minister for Finance the regulations regarding taxation of tax exiles; the rules regarding residency, the number of days which can be spent here per year, the Cinderella clause and so on; if the changes as per the Finance Bill 2010 are now in place; and if he will report on the matter specifically in relation to revised regulations in the UK; if our revised regulations are still more generous than UK rules; if the main differences will be outlined; if further revision of our regulations will be examined; and if he will make a statement on the matter. [18813/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am informed by the Revenue Commissioners that there is nothing in Irish tax law which makes reference to 'tax exiles'. I am assuming that the reference by the Deputy to 'tax exiles' is a reference to Irish domiciled individuals claiming to be non-resident for tax purposes.

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 he or she elects to be resident. Also, for years up to and including 2008, a day will only count if the individual is present in the State at the end of the day, referred to as the Cinderella rule.

This rule for residence purposes was changed in Finance (No. 2) Act 2008. For tax year 2009 and subsequent tax years, an individual will be regarded as present in the State for a day if he or she is in the State at any time during the day, not just at midnight.

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.

I presume the Deputy's reference to The Finance Bill 2010 changes relates to the Domicile Levy. This levy applies for the tax year 2010 and subsequent years with the first returns due to be filed by 31 October 2011. The levy applies where the following conditions are met:

The individual is domiciled in and is a citizen of the State in the tax year;

The world wide income of the individual for the tax year is more than €1,000,000;

The individuals liability to income tax in the State for the tax year is less than €200,000; and

The market value of Irish property on the valuation date, 31 December in the tax year, is greater than €5,000,000.

I understand that UK tax residence and ordinary residence rules rely heavily on Case Law, unlike the Irish position which is more clearly set out in Statute Law by reference to the number of days spent in the State in a tax year or a combination of tax years. The UK has a statutory 183-day "override" test: an individual who is present in the UK for more than 183 days in a tax year will be tax resident for that year, regardless of whether he or she may be non-resident under general case law-derived principles. I understand that, for 2008/09 onwards, a day's presence in the UK is counted only if the individual is present at the end of the day (at midnight).

In relation to the Deputy's query about a further revision of our regulations, it should be noted that, as with other areas of taxation, the rules are constantly kept under review.

Paul Kehoe (Wexford, Fine Gael)
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Question 117: To ask the Minister for Finance if there are plans to abolish vehicle registration tax; if so, the date same will take effect; and if he will make a statement on the matter. [18827/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have no plans to abolish VRT. In that regard it must be recognised that in Ireland VRT is an important source of revenue for the Exchequer; for example yielding around €1.3bn in 2006, €1.4bn in 2007 and €1.1bn in 2008. The receipts for 2009 at €375 million reflected the contraction in economic activity.

As the Deputy will be aware, it would not be possible to abolish VRT without raising the equivalent amount of money from other sources. The possibility of introducing widespread road pricing has at times been mentioned; however, any such measure is realistically still some way off. Increasing excise on petrol and auto-diesel has also been put forward. Abolishing VRT and collecting the same amount of revenue, that would have been raised in a normal year, from another source would, for example, require an excise, inclusive of VAT, increase on both petrol and auto-diesel of 25 to 30 cent per litre. There is no evidence that such measures would be any more agreeable to the public than VRT is, and indeed each bring their own, if different, set of problems and difficulties.