When leaving Ireland to work abroad, it’s vital to look at your tax obligations from both sides i.e. the Irish side and the foreign side.

According to Revenue, if you have been tax resident in Ireland for three consecutive tax years, you become ‘ordinarily resident’ from the beginning of the fourth tax year. If you leave Ireland after this time, you continue to be ordinarily resident for three consecutive tax years.

During these years, you must pay Irish tax on your worldwide income — with the exception of income that:

• Comes from a trade or profession (no part of which is performed in Ireland)
• Comes from an office or employment (where all the duties are performed outside Ireland)

Other foreign income such as investment income (if it is €3,810 or less) can also be exempt from Irish tax. 

If Irish tax is not owed on your income from remote work, it’s crucial to understand that this does not mean that tax is not owed. It just means that where your tax is owed will be subject to investigation based on your personal circumstances and the country in which the work is carried out.

Additional:

The great thing about this is that if you’re planning a return to Ireland within the same tax year, your tax obligations will be a lot more straightforward.

For example, in Ireland, tax is calculated based on the number of days a person spends in the country. 

To be considered a resident in Ireland for tax purposes, you generally need to be present in Ireland for:

• 183 days or more in a tax year

or

• 280 days or more in total (taking the current tax year plus the preceding tax year together)

This means that if a remote worker spends more than 183 days in Ireland in a tax year, they will still be considered an Irish tax resident and will be required to pay tax on their worldwide income to Revenue.

Note: It’s important for digital nomads to keep track of their days in Ireland and abroad to avoid any unexpected tax bills.

Can a digital nomad benefit from tax relief in Ireland?

While your exact tax situation will depend on your unique circumstances as a digital nomad, there are certain ways to minimise your tax liability with tax reliefs and deductions. However, as with all tax matters, it’s vital to never assume tax entitlements or any other factors that might affect the final amount you need to pay.

That said, some common tax reliefs and agreements digital nomads may benefit from include:

• Deductible expenses if operating as a sole trader e.g., rent for offices or co-workers, equipment, travel costs.
• Relief under a Double Taxation Agreement (DTA) — a DTA is an agreement between two countries that helps ensure tax is not paid twice on the same income.
• Split year treatment — a relief which exempts foreign employment income from Irish tax in the year of arrival/departure (conditions apply, as always)
• Remittance basis of tax (RBT) — this taxation can apply to those who are resident in Ireland but are not considered to be domiciled here. 

To find out what other benefits or agreements might be relevant to you, contact a tax professional directly.

What tax mistakes can I avoid as a digital nomad?

As widespread as taxes are, you’d be surprised by how differently governments can approach tax and related topics. Especially when everyone’s situation is different, it can be difficult to tell how the money you earn abroad will be viewed in different jurisdictions.

This is why we advise:

• Never taking tax advice from those who aren’t experts in their field — while friends or local people can offer some good insights, the only way to mitigate the risks associated with tax liability is to speak directly to locally experienced tax professionals.
• Ensuring you are aware of all tax return dates that apply to you or your company. 
• Keeping accurate records — it’s important to keep accurate records of your income and expenses, as well as any receipts or invoices. This will make it easier to file your tax return and claim any applicable deductions or credits.

It’s also good to remember that as a digital nomad, you might not have the same access to entitlements as ‘ordinary’ employees. This can include everything from health insurance to retirement benefits. To ensure you get the cover you need, always do your research before you travel and have a clear plan in place for the future.