The Domicile Levy

The domicile levy is a targeted tax designed to ensure that certain high-net-worth individuals contribute a minimum amount to the Irish exchequer. This levy applies specifically to individuals who meet all of the following stringent criteria:

• Irish Domiciled: The individual must also be considered Irish domiciled. Learn more about the concept of domicile here.
• Worldwide Income Threshold: The individual's total worldwide income for the relevant tax year must exceed €1 million. This includes income from all sources, both within and outside of Ireland.
• Limited Irish Income Tax Liability: The individual's liability for Irish income tax for that tax year must be less than €200,000. This provision ensures that the levy targets individuals who, despite having substantial income, might have a relatively low Irish tax liability.
• Significant Irish-Located Property: The individual must possess Irish-located property with a value exceeding €5 million on the designated valuation date for that tax year. This valuation date is typically determined by the Irish Revenue Commissioners.

The domicile levy is payable on a self-assessment basis. This means the individual is responsible for accurately calculating and reporting the amount of levy owed. The maximum annual amount of the domicile levy is capped at €200,000. However, this amount can be reduced by the amount of Irish income tax that has been paid for the same tax year, provided that the income tax was paid on or before the official due date for the domicile levy. The due date is consistently set as October 31st following the end of the tax year in question.

When determining whether an individual meets the €5 million threshold for Irish-located property, it is essential to understand the specific exclusions. Shares held in actively trading companies, as well as shares held in holding companies whose primary value is derived from their subsidiary trading companies, are explicitly excluded from the definition of Irish-located property. This exclusion serves to encourage investment in productive trading businesses within Ireland, by ensuring that such investments are not penalized by the domicile levy.