71 Foreign securities and possessions

Summary

In general, income from foreign securities and possessions is computed on the full amount of the income arising, irrespective of whether the income has been or will be received in the State. However, in the case of such income assessed on the arising basis which is not received in the State, any deductions and allowances that would normally be available for similar Irish source income are available. Deductions are also available for income tax paid in respect of such income in the place where the income arises, and for any annuity or other annual payment paid out of the income to a person not resident in the State. These rules do not apply to a person who is not domiciled in the State or who up to the year ended 31 December 2009 was an Irish citizen not ordinarily resident in the State. In such cases, income tax is computed on the full amount of the actual sums received in the State from remittances, etc into the State without any deduction or relief being given. Special rules apply in the case of foreign rental income which

• allow for a deduction from the rents in respect of interest paid on loans used to purchase, improve or repair the rental property, and
• provide that the amount of such income on which a debtor (within the meaning of the Personal Insolvency Act 2012) is chargeable to tax includes rents and easements arising while the property is held in trust under a Debt Settlement Arrangement or a Personal Insolvency Arrangement for the benefit of creditors.

Details

General rule

(1) Income tax is charged under Case III of Schedule D on the full amount of income arising from foreign securities and possessions irrespective of whether the income has been or will be received in the State. In the case of such income not received in the State-

• the same deductions and allowances are available as if the income had been received in the State,
• a deduction is allowable in respect of any foreign tax paid in the place where the foreign income arose, where such a deduction is not authorised or prohibited by any other provision of the Income Tax Acts,
• a deduction is allowed for any annuity or other annual payment (other than interest) payable out of the income to a person not resident in the State.

Non-domiciled or non-ordinarily resident

(2) Subsection (1) does not apply to any person who satisfies the Revenue Commissioners that he/she is not domiciled in the State or for the years up to and including the year ended 31 December 2009 being a citizen of Ireland, he/she was not ordinarily resident in the State.

(3) In the case of non-domiciled persons and for the years up to and including the year ended 31 December 2009 in the case of Irish citizens non-ordinarily resident, tax is computed on the full amount of the actual sums received in the State from foreign income or possessions in the year of assessment without deduction or abatement. For the purpose of the assessment and the computation of the tax, the rules in section 70 as modified by subsection (4) of that section apply to such income.

(3A) Where income arising outside the State is chargeable to tax under Case III of Schedule D and a payment is made under the law of the foreign territory to the person in receipt of the income by reference to foreign tax paid by another person, then the amount of income chargeable to Irish tax is increased by the amount of the payment.

For the purposes of this subsection ‘foreign tax’ means a tax chargeable and payable under the law of a territory outside the State and which corresponds to income tax or corporation tax.

(3B) Where, on or after13 February 2013 an individual who is not domiciled in the State makes a loan of, or transfers money from income arising outside the State or transfers a property acquired using income arising outside the State to his or her spouse or civil partner, and where that money or property is subsequently remitted to the State, the individual who made the transfer will be treated as if he or she made the subsequent remittance and his or her tax liability will be computed accordingly.

Foreign rents

(4) A deduction is given in taxing income from certain rental receipts for interest paid on borrowed money used to purchase, improve or repair premises (including land, tenements and hereditaments) located outside the State. The deduction is available only in respect of such income which if it arose in the State would be chargeable to tax under Case V of Schedule D.

(4A) The restrictions imposed by subsections (2A), (2B), (2C) and (2E) of section 97 in relation to relief against rental income arising in the State in respect of interest on borrowed money employed to purchase, improve or repair residential premises apply as respects foreign rents in relation to money so employed on or after 7 May, 1998. However, it should be noted that under subsection (2G) of that section relief for such interest is restored as a deductible expense in calculating tax on rental income from residential property where such interest accrues on or after 1 January 2002.

(4B) A person who has rental property outside the State, and who transfers that property to another person to hold it in trust for the benefit of creditors under a Debt Settlement Arrangement or a Personal Insolvency Arrangement entered into under the Personal Insolvency Act 2012, remains chargeable to tax in respect of rents and easements arising from that property while it is held in trust.

Appeals

(5) & (6) There is a right of appeal to the Appeal Commissioners on any question as to a person’s domicile or for the years up to and including 31 December 2009 a person’s ordinary residence. Any such appeal is to be heard and determined by the Appeal Commissioners in the same way as an appeal against an assessment to income tax. The provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law also apply.

Relevant Date: Finance Act 2019