Written answers

Tuesday, 2 November 2021

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

271. To ask the Minister for Finance the Revenue Commissioners’ position regarding its decision to relax tax residency regulations for the duration of the Covid-19 pandemic (details supplied); if this position prevails; and if so, the date on which he proposes to end this practice. [52640/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I assume that the Deputy’s Question relates to the guidance published by Revenue in respect of the application of Irish tax residency rules during the COVID-19 pandemic.

I am advised by Revenue that an individual’s tax residence depends on the number of days they are present in Ireland during a tax year. Under section 819 of the Taxes Consolidation Act 1997, an individual is considered resident in Ireland for tax purposes if they are present in Ireland for a total of:

- 183 days or more in a tax year; or

- 280 days or more in a tax year and the preceding tax year when taken together, with a minimum of 30 days in each of these years.

A ‘day’ for Irish tax residence purposes is any full or part-day that an individual spends in the State.

Since 2009, certain days of presence in the State will be disregarded in practice by Revenue under what are known as ‘force majeure’ circumstances. This applies where an individual is prevented from leaving the State on their intended day of departure because of extraordinary natural occurrences (for example, sudden and adverse weather conditions) or an exceptional third party failure or action (for example, the breakdown of an aircraft or a labour strike), none of which could reasonably have been foreseen and avoided. In such cases, the individual will not be regarded as being present in the State for tax residence purposes for the day after the intended day of departure provided the individual is unavoidably present in the State on that day due only to ‘force majeure’ circumstances. This concession is granted by way of Revenue practice and it is not set out in legislation.

On 23 March 2020, Revenue updated the existing guidance on ‘force majeure’ circumstances as it pertained to the residence rules for individuals. This formed part of Revenue’s immediate response to the severe and unprecedented situation facing individuals as a result of the COVID-19 pandemic. In the updated guidance, Revenue confirmed that where a departure from the State was prevented due to COVID-19, this will be considered a ‘force majeure’ circumstance for the purpose of establishing an individual's tax residence position.

Having regard to the unanticipated length of the pandemic, Revenue considered it appropriate to issue further guidance on the application of the concession, in particular the circumstances that Revenue may regard as falling within the scope of this concession. This further guidance was published on 21 December 2020 and it stated that, assuming all other conditions were satisfied, any individual was considered to have his or her departure from the State prevented due to COVID-19 in the following circumstances:

- That individual had COVID-19 or a family member or partner with whom they are travelling with has COVID-19,

- That individual being quarantined or self-isolating in a particular location due to suspected COVID-19,

- That individual self-isolating whether on advice from a health professional or public health guidance or self-imposed,

- That individual had received medical advice not to travel,

- An employer requested that individual not to travel,

- Border controls or entry restrictions in a home country of that individual,

- The non-availability of commercial flights.

The maximum length of time in respect of the 2020 tax year that may be disregarded (which must be consecutive days) for residence purposes due to COVID-19 under ‘force majeure’ depended on whether the individual:

1. Was present in the State on or prior to 23 March 2020, or

2. Travelled to the State between 24 March 2020 and 5 May 2020.

If an individual was present in the State on or prior to 23 March 2020, then the period from the day after the original planned departure date up until 18 May 2020, or the actual departure date if earlier, may be disregarded for the purpose of determining his or her residence.

If an individual travelled to the State between 24 March and 5 May 2020, then the period from the day after the original planned departure date up until 18 May 2020, or the actual departure date if earlier, may be disregarded for the purposes of determining his or her residence. This is subject to a maximum of 30 days permitted, except in the case of an individual whose departure is prevented due to him or her having a confirmed COVID-19 diagnosis.

In addition, it is mandatory that the individual must have left the State as soon as he or she reasonably could and, the departure must have occurred on or by 1 June 2020. Where a departure did not occur by 1 June 2020, then ‘force majeure’ will not apply to any of the days. The only exception to this is where the individual contracted COVID-19 and was not in a position to leave the State on or by this date on health grounds. In such cases, notwithstanding the fact a departure has not occurred on or by 1 June 2020, force majeure may still apply in respect of the period to 18 May 2020.

Where an individual had more than one trip to the State during the period up to 5 May 2020, only days relating to the first trip may be permitted to be considered for the COVID-19 ‘force majeure’ concession. Any days relating to a second or subsequent trip do not qualify for relief under the concession.

The specific COVID-19 related ‘force majeure’ concession seeks to give relief to individuals who, except for the unique, exceptional and unprecedented disruption caused by the COVID-19 pandemic, would not have been considered resident in the State for tax purposes, but only in circumstances where the individual maintains his or her foreign tax residence position, for example he or she remains tax resident in his or her home country. All individuals seeking to rely on the concession must maintain an appropriate record of the supporting facts and circumstances, should this be required for verification by Revenue.

Regarding the current status of the extended ‘force majeure’ concession resulting from the COVID-19 pandemic, I am advised that it only applied in accordance with the specific dates outlined above. Individuals who travelled to the State on or after 6 May 2020 will not be in a position to avail of the ‘force majeure’ concession as any subsequent departure will not be considered to have been prevented due to COVID-19. As such, the concession no longer operates.

Further information can be found at the links below:

-www.revenue.ie/en/covid-19-information/employer-reporting-and-filing-obligations/temporary-concessionary-measures-2020-only/residence-rules.aspx.

- Provisions Relating to Residence of Individual: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-34/34-00-01.pdf.

Comments

No comments

Log in or join to post a public comment.