The Lemon Fool

I've been investing in ISAs for 20 years and I am now considering early retirement. I will be living off my investments.

I'm considering retiring in Ireland. I realise the ISA wrapper will not be recognised in Ireland and I will have to pay CGT on gains. As far as I can make out, the annual allowance is only €1,270 a year and the rate of taxation is 33%. If I retire in the UK my investments are effectively tax free. So I have to work out living in Ireland is worth paying the extra tax.

Am I missing anything here? Are there any other allowances or tax efficient saving schemes in Ireland?

Snorvey wrote:Dunno but why not realise the gain in the UK before you go?

Obviously I would do that but I will still be fully invested during retirement, so would hopefully be making capital gains in the future.

What is the dividend tax like in Ireland?

It might be worth looking at whether reinvesting some of the gains realised on liquidating the ISA could be invested in something like an income investment trust or similar, with less chance of large capital gains, thus maximising any allowances for both income and capital gains.

It depends on what you're looking for but you could do what I have done - Taken early retirement and move to Northern Ireland.
UK tax system, Irish lifestyle and craic. An excellent compromise from my point of view.

staffordian wrote:What is the dividend tax like in Ireland?

It might be worth looking at whether reinvesting some of the gains realised on liquidating the ISA could be invested in something like an income investment trust or similar, with less chance of large capital gains, thus maximising any allowances for both income and capital gains.

Looks like 41% tax on both dividends and capital gains in an ETF. Dividends from investments trusts taxed at the marginal tax rate, either 20% or 40%. As far as I can tell, the only allowance I would get is €1,660 for a single person.

PhaseThree wrote:It depends on what you're looking for but you could do what I have done - Taken early retirement and move to Northern Ireland.
UK tax system, Irish lifestyle and craic. An excellent compromise from my point of view.

Part of the plan is to acquire Irish citizenship so I can move elsewhere in the EU after 5 years. I'm also concerned about the loss of EHIC if I become ill with a serious disease that travel insurance won't cover.

Don't know a lot but here is a Deloitte guide on tax for persons moving to Ireland, p5 talks about a remittance basis for Taxation.

Bear in mind that Ireland, like the US, tax on worldwide assets/income, so with dual citizenship you could end up having to pay both UK and Irish taxes (including heirs being potentially liable to two inheritance taxes). Forward time and the position as to treaties/agreements (Brexit) are potentially fluid. For example many US citizens living outside of the USA are paying (quite heavily) to relinquish their US citizenship due to taxation and reporting rules/laws.

1nvest wrote:Bear in mind that Ireland, like the US, tax on worldwide assets/income, so with dual citizenship you could end up having to pay both UK and Irish taxes (including heirs being potentially liable to two inheritance taxes). Forward time and the position as to treaties/agreements (Brexit) are potentially fluid. For example many US citizens living outside of the USA are paying (quite heavily) to relinquish their US citizenship due to taxation and reporting rules/laws.

Is there a need to hang on to UK citizenship once you have an Irish passport?

It is a bit of a myth that retaining US citizenship is costly. For ordinary income levels in European countries getting a US filing done by a professional (Bocks) would be about $500/yr and the additional tax would be zero. I have looked into this recently a d in the past so I am sure of the situation for anyone up to about $150k/yr with no complications.

(If you don't do the annual filings the fines wreck up. If you have trust fund complications and offshore tax dodges the situation gets worse. Cant think who that reminds me of. Oh, and alimony payments.)

Facts matter. What are the facts for Ireland ? And how easy is it for plain Fred Blogs to just move. Everyone else I know seems to have already done it!

Regards, dspp

1nvest wrote:Bear in mind that Ireland, like the US, tax on worldwide assets/income, so with dual citizenship you could end up having to pay both UK and Irish taxes (including heirs being potentially liable to two inheritance taxes). Forward time and the position as to treaties/agreements (Brexit) are potentially fluid.

Not really. Only the US and Eritrea tax based on citizenship. You might be confusing tax on worldwide income with tax on worldwide residence. While you are resident in Ireland, Ireland will tax your worldwide income. If you have Irish citizenship and leave Ireland, though, its tax authorities will generally leave you alone. Same as the UK. And completely different to the US, which, if you are a US citizen, will hound you wherever you go and forever to your grave (and beyond).

1nvest wrote:For example many US citizens living outside of the USA are paying (quite heavily) to relinquish their US citizenship due to taxation and reporting rules/laws.

A $2,350 fee to renounce, plus a potential 'exit tax' that could include full tax on your retirement savings as if all taken in one single withdrawal on the day before renouncing. Even so, that can be well worth the money, given the never-ending tax hassles than can arise from being a US citizen living outside the US, and with no intent to move to the US in future.

dspp wrote:It is a bit of a myth that retaining US citizenship is costly. For ordinary income levels in European countries getting a US filing done by a professional (Bocks) would be about $500/yr and the additional tax would be zero. I have looked into this recently a d in the past so I am sure of the situation for anyone up to about $150k/yr with no complications.

Well, yes and no. As with most everything to do with tax, it depends.

The major complications here come not from salary but from practically every other type of income. For example, an ISA is no shelter at all from US tax. A plain vanilla UK OEIC or ETF is an evil 'offshore' (to the US) fund, and so is taxed punitively. A UK pension may under some circumstances be treated by the US as a foreign trust, again with punitive annual tax. Gains on sale of a primary home are not tax free unless you meet a number of requirements. Repaying a non-US loan or mortgage can generate a USD gain that is taxable as income (even if the actual property sale and mortgage repayment generated a GBP loss). The US has absolutely no annual capital gains tax exemption. And on, and on, and on.

dspp wrote:Facts matter. What are the facts for Ireland ? And how easy is it for plain Fred Blogs to just move.

Even before the UK was in the EU, British and Irish citizens were able to live in the other country. More on the post-Brexit 'Common Travel Area' here:

https://www.dfa.ie/media/dfa/eu/brexit/ ... ersion.pdf

TedSwippet wrote:Even before the UK was in the EU, British and Irish citizens were able to live in the other country.

That goes back to what could have been termed the withdrawal agreement for the Irish Free State to leave the United Kingdom nearly a hundred years ago.

https://en.wikipedia.org/wiki/Anglo-Irish_Treaty

Alaric wrote:

TedSwippet wrote:Even before the UK was in the EU, British and Irish citizens were able to live in the other country.

That goes back to what could have been termed the withdrawal agreement for the Irish Free State to leave the United Kingdom nearly a hundred years ago.

https://en.wikipedia.org/wiki/Anglo-Irish_Treaty

Will that not have to change now. The UK and Ireland both joined the EU at the same time so remained under the same umbrella. Now with Ireland being more of a EU state rather than a country Anglo/Irish prior arrangements would seem to be in need of revision - otherwise that 'door' is paramount to a EU back door into the UK (EU rules may permit (or might be changed to permit) EU citizens from one state to adopt citizenship in another state i.e. Ireland, which in turn would open up free movement into the UK).

1nvest wrote:Will that not have to change now. The UK and Ireland both joined the EU at the same time so remained under the same umbrella. Now with Ireland being more of a EU state rather than a country Anglo/Irish prior arrangements would seem to be in need of revision - otherwise that 'door' is paramount to a EU back door into the UK (EU rules may permit (or might be changed to permit) EU citizens from one state to adopt citizenship in another state i.e. Ireland, which in turn would open up free movement into the UK).

The previously linked Memorandum of Understanding commits to not changing the arrangement:

The CTA and associated reciprocal rights and privileges existed long before either Ireland or the UK were members of the European Union (“EU”). The CTA and the associated reciprocal rights and privileges which Irish and British citizens enjoy are separate from, and therefore not dependent on, EU citizenship or EU membership. In the context of the UK’s withdrawal from the EU, and recognising the strong and enduring people to people ties, and long tradition of migration between Ireland and the UK, the Participants consider it desirable to provide a contemporary articulation of these longstanding CTA arrangements, and to reaffirm that such arrangements are to continue.

Whether that commitment is adhered to or broken is another question. However, there's no visible intention to change things at the moment.

I have actually given some thought myself to moving to Ireland, with a view to later regaining the EU citizenship of which I have recently been summarily stripped. However, Ireland has some very odd tax rules that would make life financially awkward given my current situation. As for other options, at one stage Portugal's NHR scheme seemed attractive, although (surprise, surprise) that looks very likely to shortly be watered down.

Thanks Ted.

Hmm! Not liking the potential for Germany potentially opening up migration from outside of EU floodgates, fast tracking EU citizenship as they did before (2 million IIRC), and then those opting for Irish EU based domicile and then using the CTA to enter the UK. One would hope that there'd at least be some form of grandparent restriction, but I suspect that a Irish EU passport might be just accepted face value.

Irelands 3 million population a decade or so ago has doubled due to migration. No longer the place it used to be I believe (not been there for over a decade, but hear through others a common theme that their 'town' has been 'overrun' by migrants and with no end in sight for that trend).

Portugal or Ireland might have been my choices, but I'd just go via the standard non-EU residence/visa route to wherever I might opt to move within the EU. But such desire is low, UK and NZ rotation looks the nicer alternative IMO.

1nvest wrote:Hmm! Not liking the potential for Germany potentially opening up migration from outside of EU floodgates, fast tracking EU citizenship as they did before (2 million IIRC), and then those opting for Irish EU based domicile and then using the CTA to enter the UK. One would hope that there'd at least be some form of grandparent restriction, but I suspect that a Irish EU passport might be just accepted face value.

Why would they want to go to the UK when they are already in Germany? Even if they get fed up of Germany they have the rest of the EU/EEA/Switzerland to choose from. How many people would bother to spend 5 years in Ireland just so they can get in to the UK?

1nvest wrote:Portugal or Ireland might have been my choices, but I'd just go via the standard non-EU residence/visa route to wherever I might opt to move within the EU.

What EU retirement visa options are there for UK passport holders, other than Portugal? As far as I can tell, Portugal requires investment of a large amount of money.

MrUnsure wrote:

1nvest wrote:Hmm! Not liking the potential for Germany potentially opening up migration from outside of EU floodgates, fast tracking EU citizenship as they did before (2 million IIRC), and then those opting for Irish EU based domicile and then using the CTA to enter the UK. One would hope that there'd at least be some form of grandparent restriction, but I suspect that a Irish EU passport might be just accepted face value.

Why would they want to go to the UK when they are already in Germany? Even if they get fed up of Germany they have the rest of the EU/EEA/Switzerland to choose from. How many people would bother to spend 5 years in Ireland just so they can get in to the UK?

1nvest wrote:Portugal or Ireland might have been my choices, but I'd just go via the standard non-EU residence/visa route to wherever I might opt to move within the EU.

What EU retirement visa options are there for UK passport holders, other than Portugal? As far as I can tell, Portugal requires investment of a large amount of money.

The two best appear to remain Ireland and Portugal. I have not seen better pathways. I am expecting they will both be tightened.

regards, dspp

dspp wrote:The two best appear to remain Ireland and Portugal. I have not seen better pathways. I am expecting they will both be tightened.

The Portugal offer is available to everyone in the world, so is it likely that extra demand from UK citizens would tip it over the edge?

Ireland requires you to live there continuously for 5 years, so that would only be attractive to the most determined. Also removing the Irish route would mean that the Irish would probably lose the right to live in the UK. If that also applied to Northern Ireland then that would be a major issue regarding the Good Friday Agreement. So probably too awkward to mess with.

Spain's "Non Lucrative Residence Permit" might be an option. You only need to prove funds of 26,000 euros.

Portugal offered the most remarkable deal, no tax for ten years for incomers. That was withdrawn on 31st March this year.