Returning to Ireland in 2020? Rebasing assets

rebasing assets - Crowe Ireland

Returning to Ireland in 2020? Here’s what you need to know.

Tax is always a major concern for any ex-pats looking to return to Ireland. Similar to our 2019 returning to Ireland series, our tax team has created a short series this Christmas outlining detail around three of the more common topics that they are asked about from people who are looking to return to Ireland and the tax implications of bringing home funds earned abroad.

Topic #3: Rebasing assets

An Irish resident and domiciled individual is liable to Irish Capital Gains Tax on the gains arising on the disposal of chargeable assets worldwide.

Where an individual is not resident and not ordinarily resident, they are only liable to Irish CGT arising on the disposal of specified Irish assets e.g. Irish land and buildings.

The first €1,270 of a gain is exempt from capital gains tax for each individual. The standard rate of capital gains tax in Ireland is 33%. An allowable capital loss may be set against chargeable gains arising in the same year of assessment or if unused may be carried forward to be set against chargeable gains in future years of assessment.

Prior to returning to Ireland and becoming Irish tax resident, it may be worthwhile disposing of and reacquiring investments which have appreciated in value to rebase the cost of these investments for Irish CGT purposes.

We recommend that all individuals considering a return to Ireland, review their portfolios of investments in advance of return. This can be extremely beneficial where investments have grown substantially in value.

Conversely, any investments that have declined in value could be retained until such time as the individual does become Irish tax resident as a disposal of these investments should generate losses which are allowance for Irish CGT purposes and can be used to offset against future gains on disposal of both Irish and foreign assets.

It may also be beneficial to rebase investments in certain offshore funds, particularly investments in offshore funds which are subject to the eight-year rule referred to above.

Disposing of and reacquiring these investments prior to becoming Irish tax resident not only eliminates the gains but also starts the eight-year clock once again.

Finally, it is important to note that any currency/ exchange rate gains arising once an individual becomes tax resident will also subject to capital gains tax in Ireland. If you are considering converting foreign currency into Euro, it may be worthwhile doing so before becoming Irish tax resident.

As with all taxation matters, we recommend that detailed tax advice is sought prior to making any decisions regarding your investments.  We also recommend that individuals speak with their investments advisors.

Read our 2019 returning to Ireland series which answers eight of the most common questions people ask about returning to work in Ireland.

Read detail for the other topics in our 2020 series:

Topic #1: The tax treatment of termination payments

Topic #2: Taxation of income from offshore funds

If you have any questions about returning to Ireland or any other personal tax issues, please contact a member of our tax team.

Lisa Kinsella on advice to individuals returning to Ireland from the Middle East: