Hi all, soon to be Irish non-dom here. I am putting pre-Ireland savings into Scalable MSCI AC World ETF (SCWX - Luxembourg Domiciled) via my IBKR LLC US account. Plan is that everything stays offshore forever/whilst I am in Ireland for the foreseeable.
Question: Does Revenue treat this Luxembourg UCITS ETF as "equivalent" (taxed as a Irish domiciled ETF would be) or "non-equivalent" (offshore is untouched)?
Advisers want €300 for 30 mins just to answer this. Before I shell out, I was just wondering if anyone had experience with Luxembourg-domiciled/non-Irish domiciled ETFs and the equivalence test? Or know if SCWX specifically passes/fails?
If anyone has general experience in being a non-dom, I'd love to chat as well.
Thanks.
Edit: Thanks for the input from everyone. I will leave this up for the one guy/girl who googles this niche question in 8 years time. I’ve decided to go with a UK trust or BRK B as they are treated as shares. There is more risk on returns as they are actively managed, but it keeps a clear separation between Irish and non-Irish assets.
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The equivalency test is very complex. €300 for a positive answer in writing is well worth.
If you're not Irish domiciled though, could you use a non Irish broker and avail of remittance basis?
My understanding is that, even though the funds, broker, or my source accounts are not IRE-domiciled, as there is an 'equivalent' ETF fund in IRE (e.g., VWRA), I will still be liable for tax as if it were.
Interesting, I've never come across that before. Seems quite conservative unless there's case law on the point that I'm not aware of.
The equivalency test is meant to see if it's akin to an Irish regulated fund or not for taxation purposes. But similar to a US LP being subject to income tax / CGT it wouldn't seem immediately obviously that that supersedes the remittance basis.
However, I've never had to look at it in depth
Ignore me, someone has got it spot on below and rightly pointed out it's D Case IV income so remittance basis cannot apply
Thanks. I’ll likely go with a UK trust or BRK B to be sure - the higher fees are offset by zero tax leakage.
Generally, anything UCITS is pretty much equivalent.
The one that might not be is URTH.
Looks like IRE/NZ has a tax treaty so the dividend tax would be 15% I believe. Not bad.
I’ll have a look into uk trusts as well.
Thanks.
This would be URTH on NYSEARCA (should be ok, but check).
UK investment trusts are ok, fall under CGT, can be taxed on remittance.
Once you are non-dom and do not move funds into an Irish account or try and spend them for things within Ireland e.g. using credit card paid off with foreign funds that is all that matters.
As a non-dem the important thing is remittance tax, the tax you pay on foreign funds if they are moved into an Irish context.
Once you leave the funds abroad in e.g. the US IBKR account then Irish tax system does not factor at all into what happens those funds.
So the import thing is to not purchase Irish domiciled funds/ETF's etc. as that could trigger remittance tax issue.
Safe bet is to purchase the US listed versions.
The equivalence test doesn't come into it re your situation, it's the domicile of the fund that matters. If you avoid EU ones completely then you are being extra safe and should be fine.
The remittance basis of tax doesn't apply to offshore funds that meet the 'equivalent' criteria. They are taxed under Case IV, and the remittance basis doesn't exist for Case IV income. You are taxable on them if resident, even if funds arent remitted.
Yep, no tax remittance applies for any UCITS compliant ETFs. Doesn't matter if you are non domiciled or the ETFs is not domiciled in Ireland. If you are tax resident you are liable
You are incorrect.
Tax remittance does not apply to ETFs (or crypto). It doesn't matter if the ETF is not domiciled in Ireland, nor if you are domiciled or not in Ireland. If you are tax resident in Ireland you are liable for all ETFs you own even if you are non-dom, you have your ETFs outside Ireland and do not remit your gains to Ireland. This is 100% true for all UCITS compliant ETFs. For non IE non EU domiciled ETFs its likely this is also true but it's not as clear.
For any other income or gains from assets/shares, tax remittance applies for non-doms, so no liability unless you remit those gains to Ireland.
I’ll avoid ETFs and go with shares to keep it clean.
Thanks for the input.
As I said, non-EU non-UCITS ETFs treatment is not as clear from Ireland's tax regime point of view. It appears they "should" be treated the same but it's not a black and white answer so it's more a matter of the individual ETF and how the Revenue is treating it, on a case-by-case basis. To be honest this level of ambiguity shouldn't happen but here we are...
Domicile is very difficult to either lose or acquire. How are you 'soon to be Irish non-dom'?
I am moving to Ireland for the first time (soon). Born in the UK and lived in AU/NZ for a decade.
Then you are not domiciled. Being domiciled in Ireland is not the same as being tax resident or ordinarily resident. Your domicile of origin is UK.
In general, only Irish born citizens are Irish domiciled. You wouldn't be domiciled in Ireland if you were born in Great Britain or any other country abroad, even if you had lived for decades in Ireland.
Becoming domiciled in Ireland is not easy, it's not automatic and it would require you to go to extremely big lengths to acquire. Domicile signifies an intention to reside in a country permanently or for an unlimited time, you need to show that you want to make Ireland your permanent home from now on, that you intend to settle and die in Ireland. And it's not easy to prove. For example, you need to show that you have completely broken your ties to your original country of domicile (where you were born). For example: do not travel back to your country for 30 years. It would also require you to show intent of settling in Ireland and the desire to live (and die) here for the foreseeable future. For example, acquiring a spot in a cemetery, which proves you WANT to settle and die in Ireland.
Again those are very extreme circumstances. In 99.99% of cases, if you were not born in Ireland you will never be domiciled in Ireland even after acquiring Irish citizenship and living in Ireland for 20 years.
If you are non-domiciled, as you surely are, you won't be liable for income or gains arising outside Ireland as long as you don't bring them to Ireland. If you are renting an apartment in London, and you leave that income in your British bank, there's no liability for you in Ireland for this rent (you are liable in the UK obviously). Same for shares. If you have your shares in a UK or EU broker, and make some gains after selling them, you are NOT liable in Ireland unless you bring those gains to Ireland. This is called tax remittance.
And as we previously said in this thread, this does not apply to ETFs, so you are always liable for ETFs in Ireland if you are resident (even if non-domiciled).