Levy aimed at tax exiles paid mostly by Irish residents

The majority of people who have paid the Government’s high-profile levy to make wealthy tax exiles contribute their fair share are Irish residents, living and working in the State on a permanent basis.

A domicile levy of €200,000 was introduced by the late Brian Lenihan when minister for finance in budget 2010, as a means of getting non-resident and wealthy Irish tax exiles who paid little or no income tax to "make a contribution to the State, especially during times of economic and fiscal difficulty".

But figures supplied by the Revenue Commissioners to The Irish Times show the measures are not having the desired effect. The number of wealthy tax exiles who have paid the levy is small – in the three years for which figures are available, an average of nine people paid each year.

Irish-resident

Nearly twice as many Irish-resident taxpayers, some 17 in all, paid the levy in 2010, the first year of its operation.

A majority of those who paid the levy in 2011 were Irish residents; and while the number of residents is lower in 2012 (six) than the number of non-residents, the Revenue says that number will end up being higher when its compliance activities for that year have been completed.

Overall, the tax take from the levy has also fallen off since the first year of its introduction, from about €3 million in 2010 to €2.7 million in 2011 to €1.9 million in 2012 (though that figure will rise). The overall figures have fallen from 29 in 2010 to just 15 in 2012.

The domicile levy was aimed at those with capital assets worth more than €5 million whose worldwide income exceeded €1 million and whose income tax bill was less than €200,000.

The levy applied to all those domiciled in the Republic – those resident in the Republic as well as non-residents who spent 163 days or more out of the State in a given year.

Fishermen

One group who found themselves liable were fishermen who own trawlers in their own names.

These include Frank Doherty of Killybegs and Kincasslagh in Co Donegal, whose family company operates two large modern trawlers and fish factories, and employs up to 90 people locally.

Mr Doherty learned he was liable for the levy even though he lives and works in Co Donegal. One of his two trawlers, the MV Western Viking, was registered under his name. Trawlers such as it are worth between €15 million and €20 million.

The Western Viking was generating an income of more than €1 million, the vast bulk of which was servicing the bank loan raised to purchase it.

The argument made by Mr Doherty is that the massive tax bill he faced did not reflect his true income (as most of the boat’s income serviced loans).

The measure as applied to him, he contended, went against the original intention, which was to target tax exiles.