Domicile in Irish Tax Law Explained

What Is “Domicile” in Ireland—and Why It Matters?

In Irish tax law, domicile is a unique legal concept. It is not the same as residence, nationality, or citizenship. Instead, domicile is about where you consider your permanent home to be - the country you ultimately intend to remain in indefinitely. Because domicile is tied to long-term intention and connection, it is far more difficult to change than residency.

Every individual has a domicile of origin, usually acquired from their father at birth (or mother if parents are unmarried). This domicile of origin sticks with you unless you clearly establish a domicile of choice in another jurisdiction. Establishing a domicile of choice is difficult - it requires both physical relocation and compelling evidence that you intend to remain in your new country permanently.

Why does domicile matter? Because your domicile status has significant tax consequences in Ireland. If you are resident and domiciled in Ireland, you are subject to Irish tax on your worldwide income and gains. If you are resident but non-domiciled, you are generally taxed only on your Irish income and on foreign income that you bring to Ireland. This distinction can mean the difference between paying tax on all your global earnings versus only those brought into the country.

Domicile vs Residence – Key Differences

• Residence is about your day-to-day presence. If you spend 183 days or more in Ireland in a tax year, or 280 days across two consecutive years, you are tax resident here. Residency is factual and changes as your circumstances change.
• Domicile, on the other hand, is deeper and harder to change. You may leave Ireland for decades, but unless you establish a new domicile of choice with clear evidence of permanent relocation, you will often remain Irish domiciled.

This distinction is crucial for high-net-worth individuals, expatriates, and returning emigrants, all of whom may find themselves unexpectedly exposed to Irish tax because their domicile remains Irish despite living abroad.

Overview of the Tax Consequences of Being Irish Domiciled

Worldwide Income

If you are resident and domiciled in Ireland, you are taxed on all global income—from employment, pensions, dividends, rental income, and other sources. This comprehensive taxation can create substantial exposure for globally mobile individuals with investments and businesses overseas.

Inheritance and Capital Taxes

Domicile affects not just income tax but also Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT). If you are domiciled in Ireland, you may be liable for CAT on gifts and inheritances even if they involve foreign assets. Non-domiciled residents, by contrast, often have limited CAT exposure unless the assets or the disponer are connected with Ireland.

The Domicile Levy

For very wealthy individuals, domicile status can also trigger the Domicile Levy, a €200,000 annual charge imposed if four strict conditions are met: being Irish domiciled, having worldwide income over €1 million, paying less than €200,000 Irish income tax, and owning Irish property worth more than €5 million. This makes domicile a critical consideration in wealth management and estate planning.

How Domicile Affects Income Tax, Capital Gains Tax and Capital Acquistions Tax

Your domicile status has a significant impact on how you are taxed in Ireland. While residency determines whether you are considered an Irish tax resident in a given year, domicile looks deeper: it is about where your permanent “home” is intended to be. This distinction is especially important for three major taxes: Income Tax, Capital Gains Tax (CGT), and Capital Acquisitions Tax (CAT).

Income Tax

If you are resident and domiciled in Ireland, you are liable to Irish income tax on your worldwide income. That includes employment earnings, rental income, dividends, and other income sources no matter where they arise.

If you are resident but non-domiciled, you are taxed on:

• All Irish-sourced income, and
• Any foreign income that is remitted (brought into) Ireland.

This “remittance basis” can make Ireland attractive for internationally mobile individuals who are resident here but maintain a foreign domicile.

If you are non-resident, you are generally only taxed on Irish-sourced income, regardless of domicile.

Example: Anna, who is German-domiciled but living in Dublin, pays Irish tax on her Irish salary and rental income. She also has dividend income from German shares. If she leaves the dividends in Germany, they are not subject to Irish tax. But if she transfers them to her Irish bank account, they become taxable here.

Capital Gains Tax (CGT)

Residents who are also Irish-domiciled are taxed on their worldwide capital gains, regardless of where the assets are located or where the proceeds go.

Residents who are non-domiciled are taxed on Irish gains in full, but only on foreign gains if those proceeds are remitted to Ireland.

Non-residents who are also non-domiciled are only taxed on Irish-sited assets, such as Irish property or shares in Irish companies.

Example: Mary, who has an Irish domicile of origin, sells shares in a US company while living in France. Unless she has clearly acquired a French domicile of choice, Ireland may still tax her gain. In contrast, Anna, who is German-domiciled but resident in Dublin, is not taxed on gains from her German shares as long as she keeps the proceeds abroad.

Capital Acquisitions Tax (CAT)

CAT, which applies to gifts and inheritances, also depends heavily on domicile.

If you are domiciled in Ireland, you are taxed on worldwide inheritances and gifts.

If you are non-domiciled, CAT applies only where the asset is in Ireland, or where either the person giving or receiving the gift or inheritance is resident or ordinarily resident in Ireland.

Example: Brian, Irish-domiciled, inherits money from his aunt in Spain. Irish CAT applies, even though the funds are abroad. By contrast, Sofia, who is Italian-domiciled but resident in Ireland, inherits money from her father in Italy. Because both parties and the asset are outside Ireland, no Irish CAT arises. If, however, she inherits a Dublin apartment, CAT applies.

Why This Matters

The interplay between domicile and residency can dramatically affect your exposure to Irish taxation.

• For Income Tax, domicile determines whether foreign income is taxed automatically or only when remitted.
• For CGT, domicile decides whether foreign gains are brought into the Irish tax net.
• For CAT, domicile governs whether inheritances and gifts abroad are taxable in Ireland.

Understanding your domicile - and whether you have retained your domicile of origin or acquired a domicile of choice elsewhere - is critical for anyone with cross-border assets, income, or family connections.

Real-Life Scenarios of Domicile in Action

The Returning Emigrant: Mary was born in Ireland but has lived in Canada for thirty years. She never made a permanent declaration that she intended to stay in Canada indefinitely, nor did she cut formal ties with Ireland. For tax purposes, she is still considered Irish domiciled. When she inherits property abroad and later sells it, Revenue taxes her global gains and inheritance due to her domicile status.

The Non-Domiciled Resident: Alex was born in the UK and moved to Dublin for work. He rents an apartment in Dublin but maintains his UK home, intends to return, and keeps his family ties there. Alex is Irish tax resident but non-domiciled. He pays Irish tax on his Irish salary and any foreign income he remits, but he does not pay Irish tax on foreign income that he keeps abroad.

The Wealthy Investor Abroad: David left Ireland for Dubai twenty years ago but never established a domicile of choice elsewhere. He still votes in Ireland, keeps his family home, and returns frequently. Despite living abroad, he is still Irish domiciled. His worldwide investment portfolio and property holdings are exposed to Irish taxation.

The Dual Property Owner: Sophie splits her time between Ireland and Spain. She argues that Spain is her domicile, but her ties remain stronger in Ireland -her children are educated here, she retains Irish citizenship, and most of her estate planning documents are Irish. Revenue could challenge her claim, leading to significant Irish tax exposure.

Born Abroad to Irish Parents

An individual's domicile status can become quite nuanced if they are board outside of Ireland to Irish paretns. For example;

• Sarah is born in London. Her father was born in Galway but had moved permanently to the UK before she was born.
• Domicile status:

Sarah inherits her father’s domicile of origin.

If her father kept his Irish domicile of origin, then Sarah also gets an Irish domicile of origin — even though she was born in the UK.

If her father had truly changed to a UK domicile (clear evidence of permanent residence), then Sarah gets a UK domicile of origin.

• Implication: Birthplace alone doesn’t decide domicile — it flows from the parent’s domicile at the time.

Changing Your Domicile (Domicile of Choice)

Changing your domicile status requires signficiant evidence that the individual has left Ireland on a permanent basis. For example;

• Liam was born in Cork. He moves to Australia at 30, marries there, buys property, raises kids, and becomes an Australian citizen.
• Domicile status:

Liam’s domicile of origin is Ireland.

But with permanent relocation, citizenship, and clear intent never to return, Liam can acquire a domicile of choice in Australia.

• Implication: From then on, for Irish tax purposes, Liam is non-domiciled. He would only pay Irish Capital Gains Tax or Inheritance Tax on Irish-sited assets, not worldwide assets.

Common Misconceptions

Many people misunderstand domicile. Some of the most common misconceptions include:

• Believing that living abroad automatically changes your domicile. In reality, unless you take clear and permanent steps to establish a new domicile, your Irish domicile of origin often remains intact
• Assuming citizenship equals domicile. While they can overlap, they are distinct concepts. You can be an Irish citizen without being domiciled in Ireland, and vice versa
• Thinking that changing domicile is easy. Establishing a domicile of choice requires strong evidence of intent, such as buying a permanent home abroad, severing ties with Ireland, moving your family, and integrating into your new country

Why Correctly Establishing Domicile Is Critical

Getting domicile wrong can have enormous tax consequences:

• You could unknowingly be exposed to Irish tax on your worldwide income
• You might face unexpected inheritance tax bills on overseas assets
• High-net-worth individuals may be hit with the €200,000 Domicile Levy
• Inconsistent or weak documentation may lead to Revenue audits, penalties, and interest

How Irish Tax Hub Can Help

Determining and proving domicile is not straightforward. It often involves a detailed examination of your personal, family, and financial circumstances. At Irish Tax Hub, we specialise in helping individuals understand and manage domicile issues by:

• Reviewing your personal circumstances to determine your current domicile status
• Advising on whether you still hold a domicile of origin or have established a domicile of choice
• Assisting high-net-worth individuals with domicile levy planning and compliance
• Providing professional support in preparing documentation and evidence for Revenue if your domicile status is questioned

Final Thoughts

Domicile may sound like a technical legal concept, but in Ireland it is one of the most critical factors in determining your tax exposure. It can affect your liability for worldwide income tax, capital gains, inheritance tax, and even special charges like the Domicile Levy. Misunderstanding it could mean overpaying, underpaying, or facing unwelcome audits.

If you are living abroad, moving to Ireland, or planning your estate, it is essential to understand your domicile status. Expert advice can make the difference between clarity and confusion. The team at Irish Tax Hub is here to guide you, ensure your affairs are structured correctly, and give you peace of mind when dealing with this complex area of Irish tax law. Contact us today to learn more.