Ireland Fact-File Part 3:
Individual Business International Taxation

3.1 Ireland Individual Business International Tax Liability

Taxes incurred in foreign countries

The circumstances in which an individual based in Ireland can incur tax in a foreign country are (unfortunately!) many and various, and income, both active – ie trading, and passive – ie investment and rental income, must be declared in Ireland by a resident individual, although if there is a double taxation agreement in place, the tax can usually be reclaimed from one side or the other!

Value added tax may also be a consideration, depending on the turnover level, and under new rules coming into force between 2010 and 2015 which are likely to affect individuals exporting their services, business to business (B2B) supplies of services will be subject to VAT in the country in which the consumer is located, rather than the supplier's country of residence, with the business consumer required to account for VAT using the reverse charge mechanism (whereby they act as both the supplier and the consumer, charging themselves the VAT where appropriate, and then claiming it back). However, changes relating to telecoms, broadcasting and electronic services are being delayed until January 1, 2015.

For business to private consumer (B2C) supplies of services, the place of taxation with regard to VAT will remain as the supplier's location.

There will, however, be certain exceptions, where the general rules do not apply, and specific rules will be in place, to reflect that the place of taxation should be where the service is consumed. Exempted areas will include: the electronic supply of services, telecommunications and broadcasting, certain catering and hospitality services, scientific and educational supplies, and cultural and sporting services and supplies.

Tax reporting abroad

Although the situation will vary to a degree according to the country in question, if an Irish resident individual wants to avoid paying tax twice on the same income (once overseas, and again in Ireland), they will need to provide the Revenue Commission with evidence of the foreign tax payment, meaning that the submission of a foreign tax return (in order to obtain such evidence) is likely to be necessary.