CGT on Shares if Temporary Non-Resident

tadhg2011

Good morning All,

I have an unusual scenario that a mate of mine asked be about, and as I'm about to fall into his sitauation, I was hoping someone could help me.

He is an Irish citizen, that has been living in Saudi Arabia for 4 years (he gets home to Ireland for one month each year).
He has bought shares on the London Stock Exchange (LSE) since he left Ireland, and he has since disposed of them a few weeks back. He made a nice little profit from his venture.
He will be in Saudi for another 2 years.

When he returns to Ireland in 2 years, he will become a resident again, and will rejoin the The System in the Ireland.

My questions is as follows:
While he be liable for Capital Gains Tax (CGT) on the money he made on his shares when he re-patriates his savings, bearing in mind the length of time he will have been non-resident.

I have come across the below on Revenue.ie, which talks about 'Temporary Non-Residence', but I'm not certain if he is considered Temporary Non-Resident:

Temporary Non-Residence

Finance Act 2003 introduced anti-avoidance measures where certain assets are disposed of during a period of temporary non-residence. These measures impose a Capital Gains Tax charge in respect of a deemed disposal of certain assets owned by an individual on the last day of the last year of assessment for which the individual is taxable in the State, prior to becoming taxable elsewhere. However, this charge will only arise:

if the indivdual is not taxable in the State for a period of five years or less before again becoming so taxable, and

to the extent that the individual disposes of those assets during that period.

Any help would be appreciated.
Thanks.

beeftotheheels

I would suggest a little more digging!

The temp non-resident rules are designed to catch e.g. Mr Denis Bloggs who owns a significant stake in a company, say one which managed to acquire a mobile phone licence, worth €xm who heads off to Spain, disposes of the shares, and then comes back to Ireland paying no tax on the disposal.

1. You have to own the assets while Irish resident (you have to have them before you leave), and
2. Only certain assets are caught, for shares they have to exceed a certain threshold amount, so €3k worth of Tesco shares bought on the LSE would not be caught, €100m worth of shares in your own family company would be caught.

The tests for shares are basically that you either own 5% or more of a family company, or that the shares are worth more than €500k when you leave.

What the rules do is deem you to dispose of, and immediately reacquire the assets in the year of departure.

tadhg2011

Thanks for your response beeftotheheels. Will take your advice and go a little deeper to be on the safe side, but your comments sound pretty positive . .. . . as my mate is leaning more towards the '3k Tesco shares' than partial ownership of Shell, I think he should be safely off any radars!
Plus, all his buying and selling happened after he left the Emerald Isle, so he should be good.

Appreciate the help.

beeftotheheels

tadhg2011 wrote: »

Thanks for your response beeftotheheels. Will take your advice and go a little deeper to be on the safe side, but your comments sound pretty positive . .. . . as my mate is leaning more towards the '3k Tesco shares' than partial ownership of Shell, I think he should be safely off any radars!
Plus, all his buying and selling happened after he left the Emerald Isle, so he should be good.

Appreciate the help.

If in doubt, get him to give Revenue a call. They generally won't commit in a hypothetical scenario, but if he chats to them and is willing to send them an email with the facts then they might be able to give him an answer.

For the most part Revenue are a nice bunch who don't like the aspect of their job that involves chasing down crooks, and would much prefer to give people a few pointers up front so they can be compliant.

If you phone them on behalf of your friend they won't tell you over the phone what the answer is, but they might tell you the precise info that your mate needs to email them in order for them to tell him whether he would be taxeable or not if he comes back to Ireland.