Tax exile levy applied to only 10 individuals

JUST 10 tax exiles have paid an average of €147,000 each under a new levy aimed at wealthy Irish citizens who are domiciled here but declare themselves non-resident for tax purposes.

The domicile levy was announced in the 2009 budget as a way of ensuring all wealthy non-residents who pay little or no income tax make a contribution to the State. This is the first year payments under the levy have fallen due.

The deadline for returns to the Revenue Commissioners expired this week and final figures show there were 10 returns with total tax paid amounting to €1.48 million. The new domicile levy imposes a charge of €200,000 annually on certain non-residents.

The fact that the average payment for the 10 individuals was €147,000 indicates that they were able to write off other income tax in Ireland against the levy.

There are also other exemptions available. For example, shares in trading companies are not included in a person’s capital. It applies to individuals whose liability to Irish income tax is less than €200,000, whose worldwide income for a tax year is over €1 million and whose Irish-situated property or assets is valued at over €5 million on a valuation date.

The number is significantly smaller than had been anticipated. For example, about 5,800 Irish people declared themselves non-resident for tax purposes on their tax forms, latest figures show. Of these, Revenue estimated in 2009 that about 440 were very wealthy. Their activities had been closely monitored to make sure they adhered to residency regulations.

The levy legislation was introduced by the previous government and replaced the so-called “Cinderella rule”, whereby non-resident tax exiles could spend a day in the State provided they left by midnight.

Labour TD Gerald Nash has criticised the measure as a “softly softly” approach to “perma-tanned tax exiles”.

“This measure was mere window dressing and has proved totally ineffective,” Mr Nash said. He has urged the Minister for Finance to introduce a revised levy with “real bite.”

Announcing the plan in December 2009, the then minister for finance Brian Lenihan said the move would ensure Irish-domiciled tax exiles would pay their fair share of tax. “We must ensure that every wealthy Irish domiciliary who pays little or no income tax makes a contribution to the State, especially during times of economic and fiscal difficulty,” he said.

The move to pursue tax exiles followed a comparable scheme introduced in Britain by then chancellor of the exchequer Alistair Darling in March 2008. That proposal imposed a fixed annual charge of £30,000 (€33,136) on long-term residents in Britain claiming non-resident status.