Split Year Residence (SYT)
The Bill contains some important and welcome amendments to the SYT rules applicable to cross-border employees who arrive in or depart from Ireland for extended work purposes.
Under the Irish tax residence rules, an individual is regarded as either resident or non-resident for a full tax year. The current SYT rules are designed to prevent double taxation on employment income for cross-border employees by deeming the employee to be
- tax resident in Ireland from the date of their arrival where they are Irish tax resident in that year, have not been Irish tax resident in the prior year and will be tax resident in the subsequent year;
- Non-Irish tax resident from the date of their departure where they are an Irish tax resident in that year and will not be so resident in the subsequent year
Contrary to established practice going back a number of years, Revenue has recently been disallowing SYT claims where the taxpayer failed to elect for the relief by the end of the year of arrival/departure causing issues for many taxpayers.
In a positive development, the Bill seeks to address this issue by providing that, with effect from 2026, even where an individual does not make a formal SYT election in year of arrival or departure, the relief will still apply if the residence conditions described above are met by the individual in respect of each of the noted years.
The legislation continues to provide for an election by an individual for the application of SYT in the year of arrival or departure based on future residency intentions.
The amendments are overall positive developments in view of the current experience whereby multiple claims are being disallowed by Revenue. This will provide a greater degree of certainty and simplification of the tax treatment for mobile employees going forward.