10/08/2022

10/08/2022

One-in-six worth over €20m are tax exiles

Ultra-rich are worth €20m or more and 2,000 of their associates are on a watch list

 
Niamh Horan – Sunday Independent – 7th August 2022
  One-in-six of Ireland’s richest people with a net worth of €20m or more are tax exiles, according to the Revenue Commissioners.   The news comes as the latest figures, released to the Sunday Independent, show that Ireland now has 1,400 individuals who are worth €20m or more.  Of this group, 210 are non-resident for tax purposes.   Since 2020, 430 new individuals have joined the league of the ‘€20m plus’ club. The numbers of tax exiles worth €20m or more has also jumped by 40pc since 2020- with 60 more individuals becoming non-resident for tax purposes in the past two years.     Paul Leonard, Head of Audit at Cooney Carey accountants explains the increase: “What is interesting is that there are only 1,400 individuals worth over €20m, which is a very small proportion of our population.  These individuals grow and build successful businesses and as such are very important to our economy. We have been working with a lot of business owners in the past three to four years who are selling their businesses and realising value for 30-40 years of work. We help them value their business, source purchasers, negotiate and provide tax advice.  I believe these are the people representing the 40pc or extra 60 individuals.  A number, if circumstances allow, do chose to move non-resident. Only 14% of the new 430 individuals valued over €20m chose to go tax non-resident, which can be a tough choice, especially if they have children and grandchildren in Ireland. While tax non-residents do invest in our economy, it is positive to see that 86% of the new €20m grouping are tax resident and continuing to invest in Irish businesses and jobs”   Before 2020 the division in Revenue which oversees “Large Cases-High Wealth Individuals” (LC-HWI) was responsible for people with an estimate net worth of €50m and over. Since then, Revenue defines high-wealth individuals (HWIs) as those with a net worth of €20m or more.    There are currently 3,400 cases managed in the LC-HWI Division. Of these, 300 are non-resident.  The 3,400 include a ‘watch-list’ of 2,000 individuals who are spouses, children, trusts and foundations associated with people worth over €20m, 90 of this group are living abroad for tax purposes.  Mr Leonard says: “Revenue want to better understand the financial standing of HWI’s and all the people associated with them. Their better understanding of these individuals and their tax affairs can identify sections of tax legislation that may need to be modified.”   The list of high wealth individuals is confidential. But some of Ireland’s biggest business figures are known to have moved their bases to generous foreign tax shelters. Denis O’Brien, the telecoms entrepreneur is tax resident in Malta. Dermot Desmond, the founder of NCB stockbrokers is a tax resident in Gibraltar. Michael Smurfit, the paper packaging tycoon who celebrates his 86th birthday today, lives in Monaco while the racehorse magnates JP McManus and John Magnier are both tax resident in Switzerland. In contrast, Michael O’Leary, the Ryanair chief executive whose wealth is estimated at €823m by Irish rich lists, pays his taxes here.   To qualify as “non-resident”, people must spend less than 183 days a year in Ireland, or 280 days over two years. A day spent in Ireland does not count as a day of residency if the individual has left the jurisdiction before midnight - because of the so-called “Cinderella clause”.    Elsewhere, figures released by the Revenue show that a €200,000 levy aimed at wealthy Irish citizens who declare themselves non-resident for tax purposes was paid by just 16 people in 2020. Together they paid a total of €2.67m. After 12 years in force, the domicile levy, introduced by former minister for finance Brian Lenihan as a way of ensuring all wealthy non-residents who pay little or no income tax make a contribution to the State, has raised a total of €27.49 million. Of the 210 non-residents worth over €20m, only 16 pay the Domocile Levy, which unfortunately means the other 194 high net worth individuals are now investing outside Ireland, which is a loss to our economy.   The news comes as the Knight Frank predicts the number of HWIs in Ireland is set to increase by 209pc by 2026.   Meanwhile, Revenue figures show so-called Form 11 returns filed where the taxpayer indicated that they were not domiciled in Ireland, irrespective of their residence status, was 45,776.   The Tables provided by Revenue are below:-  

Large Case High Wealth Individuals (“LC-HWI) Cases

The case base of the Large Cases High Wealth Individuals Division (LC-HWI) is constantly changing with individuals moving in and out based on their circumstances in the context of the relevant criteria. Consequently, figures represent a point in time only and are subject to change. Since 2020 Revenue’s Large Cases-High Wealth Individuals Division (LC-HWI) is responsible for individuals with an estimate net worth of ≥ €20m. Prior to 2020 the Division defined high-wealth individuals (HWIs) as individuals with a net worth of €50m.   The table below provides case-base information for 2022, 2021 and 2020. Due to the nature of how the data relating to the HWI case base was recorded prior to 2020, it is not possible to provide figures for previous years.  

Domicile levy

The Domicile Levy is a self-assessed levy on taxpayers who are Irish-domiciled and whose:   
  • gross world-wide income exceeds €1m,
 
  • Irish property (excluding certain shares) is greater in value than €5m, and
 
  • liability to Irish tax in a relevant year was less than €200,000.
  The amount of the levy, which is payable annually, is €200,000. Irish income tax paid by an individual in a tax year is allowed as a credit in calculating the amount of Domicile Levy due for that year.   The up-to-date details for the number of Domicile Levy returns and related payment of liabilities for the years 2010 to 2020 are set out in the table below. Individuals liable for the Domicile Levy are required to file a return and pay the levy due by 31 October of year following the relevant tax year. As such, Domicile Levy returns and payments in respect of 2021 are not due until 31 October 2022. (*) Where there is a relatively small number of cases, Revenue is obliged by law to ensure that taxpayer information about individual taxpayers or a small group of taxpayers cannot be deduced from the data released.