Do I owe Revenue tax after working in Saudi Arabia?

Question:

I’m concerned about my time spent working abroad in Jeddah in Saudi Arabia, from January 2013 to June 2014. When I returned home I transferred my money into my Irish account. I went back to work again in Ireland and didn’t inform Revenue about working abroad. I was never taxed on my Saudi income or savings.

I’m planning to buy a house now with my partner and I don’t want Revenue to come asking for tax during my mortgage period. Should I ring Revenue now and ask them if I owe any money?

Answer: Barry Flanagan, director of Taxback.com

On the understanding that you are an Irish domiciled individual (i.e. you are an Irish citizen and intend for Ireland to be your permanent home), and based on entry and exit dates provided, the likelihood is you have no cause for concern.

Assuming you did not spend much time in Ireland in 2013 after your departure, it appears you will be regarded as non-resident in Ireland for that year.

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In order to become non-resident, you need to pass two “day” tests. Firstly, you would need to have fewer than 183 days in Ireland in 2013. Based on the info provided, this seems very likely. Secondly, you would need to have spent fewer than 280 days in Ireland in 2012 and 2013, or fewer than 30 days in Ireland in either year.

Effectively, if you had fewer than 30 days in Ireland in 2013, you are regarded as non-resident. As a non-resident, Irish domiciled individual, you would remain taxable in Ireland on your worldwide income, but you can exclude employment income where duties were exercised wholly outside of Ireland. On the understanding that your employer was not Irish and you had fewer than 30 workdays here in 2013, the income from Jeddah will not taxable in Ireland.

Even if you did spend some time in Ireland in 2013 and exceeded that 30 day de minimus, the income still may not be taxable. If you became non-resident in 2014 (per the above “day” tests), the you can claim a relief known as “Split Year relief” from your date of departure in the preceding year of 2013. So non-residency in either 2013 or 2014 will effectively produce the same result - the income from a non-Irish employment can be excluded from the charge to Irish tax.

For 2014, the position is somewhat similar. If you are regarded as non-resident in 2014, you will have two options:

1. To remain non-resident, which produces the same taxation scope as above. However, you will not be entitled to full tax credits, but can claim proportionate tax credits as Ireland has a double tax treaty with Saudi Arabia.

2. To claim full tax credits, you could elect to be resident, on the basis you will be resident in 2015. Income from Jeddah would then be excluded based on “split year” basis (though only if you didn’t claim split year relief in 2013).

The nightmare scenario for you is if you did not at any stage break Irish residency. Again this is determined purely and solely by the above “day” tests. In this instance, you would remain taxable on your worldwide income with no exclusions and Revenue would seek to tax all of this income.

It is important to note that whether or when you transferred the money to your Irish account is irrelevant. The “remittance basis” is applicable only to non-domiciled individuals. So this income is either subject to Irish tax (unlikely, based on the facts as presented) or not, regardless of where the bank account the money rested in was located.

If you did break residency, no further action is required. This income is not taxable in Ireland. If you did not, you will need to contact Revenue to reconcile your position.

[ abroad@irishtimes.com ]