A wealthy Irish businessman has failed in his bid to successfully challenge the validity and interpretation of the State’s domicile levy.
The Tax Appeals Commission has ruled the levy, which is imposed on rich taxpayers, is not a tax and does not interfere with the free movement of capital.
The individual, who is not named in the newly-published outcome of a hearing, was hit in 2015 by the Revenue Commissioners with a total domicile levy demand of €261,000 in respect of 2010 and 2011. He had been domiciled and resident in Ireland at all material times.
He insisted he was not liable for the levy demanded and launched an appeal against the assessment.
The domicile levy was introduced in 2010 in the depths of the financial crisis. Only a tiny proportion of Irish taxpayers have to pay the levy. In 2011, 33 people paid it. Just nine paid it in 2015. Among those who paid it in 2012 was horse racing tycoon JP McManus.
An Irish-domiciled person can be liable for the levy if their worldwide income exceeds €1m, the value of their Irish property is more than €5m, and their Irish income tax liability in a year was less than €200,000.
The levy is €200,000 a year. The amount of Irish income tax paid can be offset against the levy. Payments made under the Universal Social Charge cannot.
The Tax Appeals Commission heard that the businessman met some criteria to be liable for the domicile levy. He had Irish property worth more than €5m at the time for which the levy demand was made. He also had worldwide income of more than €1m in each of the 2010 and 2011 tax years.
But the businessman told the Commission that the amounts of an income levy and USC paid by him in the relevant years should be taken into account when assessing whether he was a relevant individual under the domicile levy legislation.
He insisted that USC should be considered an income tax for the purposes of the domicile levy. He claimed that because it’s not paid by companies, it is not a corporate tax, and must therefore be an income tax.
In its ruling, the Commission upheld the levy assessment against the businessman. It also ruled that the levy does not interfere with his rights to the free movement of capital.