Tax change may draw wealthy individuals to Ireland

IRELAND could attract thousands of high-net-worth individuals based in Britain arising from a small change to the tax system in yesterday’s budget.

“Arising from EU requirements, the [Finance] Minister has introduced rules that will make it very attractive for individuals currently resident in the UK to relocate here,” says Pádraig Cronin, head of tax accountants Deloitte.

“This represents a significant marketing opportunity for Ireland Inc to position itself as a hub for high-net-worth individuals who make significant income and gains from investments and trading activities sourced in the UK. Such individuals could act as a catalyst to attract further business to this country.”

Finance Minister Brian Cowen’s counterpart in Britain has targeted closing loopholes that allow the bosses of private equity firms to reduce their tax bill on their income and there have also been calls to levy a fee on those that seek non-domiciled tax status.

That has led to fears of an exodus of these individuals to offshore havens and presents an opportunity for Ireland.

There are 3,000 individuals with non-resident tax status in Ireland compared with an estimate of 150,000 in Britain. The majority of these people work in London’s financial heartland and generate substantial income. While they would also be able to claim non-resident status here, attracting them would boost the country’s status as a base for key businesspeople and have a knock-on affect on the wider economy.

Separately yesterday came the Government’s decision to extend the lifetime for claiming R&D credits out to 2013.

Brian Keegan, director of taxation at the Institute of Chartered Accountants in Ireland, said: “Modern high value manufacturing cannot survive without R&D facilities.

“When companies are encouraged to locate their R&D facilities here, the chances of our retaining their manufacturing facilities are greatly improved.”

He said when this was coupled with the expenditure commitments toward the National Development Plan, Ireland should head toward the top of the list as the best location for multinationals wishing to establish a foothold in Europe. He welcomed the decision to leave the PRSI regime for employees largely unchanged: “The reform of PRSI is not simply a matter of adjusting thresholds and rates — any reform would result in the effective introduction of an additional tax on employee income.”