Paying Tax while in Ireland

[Jellybean105]

Hi

I am currently self-employed in Ireland. I registered my business in Feb 2013 but applied for tax registration in August I think. I wanted to know if anyone has any idea when I need to file a self-assessment? And if I'm making a loss, how do I go about Tax.

I thought I had to wait until I have done one year of business.

Any help would be appreciated!

[Latintraveller]

I believe that no tax will be due until October 2014, but I could be wrong. If you have made over €5000 you need to pay 4% of your profit (minimum €500 or around €300 if you are below the tax threshold) for your Social Insurance (PRSI). Contact the tax office.

If you and your family are short of cash you could contact the dole office and they may give you a weekly cash injection (minus a small disregard). You should be counted as habitually resident as you are self employed.

[Brigid from Ireland]

Personally I would recommend that you attempt to make a profit, sufficient to pay a small amount of prsi/tax. Once you make a profit, it is very difficult to argue that you are not self employed.

Making a loss could cause trouble with the visa /migrant worker rights- not sure, and I would hate to have to fight a case over it because you declared a loss when the amount of tax/prsi on a very small profit is quite low.

You need to earn at least 5 thousand profit to be eligible for prsi (500 euro or 4%) and tax also as appropriate. It would be unwise to declare a profit of 5 thousand exactly, as this would seem artificial.

You may file the self assessment at any time after 1.January.2014 (the end of the year 2013 has happened, so you can calculate the amount in January). For immigration purposes, it is better to file soon in January, as you need the paperwork from the tax office as proof that you are a self employed migrant worker. From the tax office view, you need to file before October 2014.

Latintraveller is correct when he states that there may be eligibility for a 'top up' from social welfare - it is not certain, but it is possible.

[Jellybean105]

Thank you both for your replies. Well I can show a profit if I don't show too much stock.

I am not worried about benefits at the moment. I know it makes no difference but my husband works as well so we can support ourselves.
We are planning to return to the UK in Feb, so I'm not sure whether I should file anything or if I should tell them I have stopped trading? I would need to do that after I have received my husbands resident card due Feb 15th.

I have already sent off proof for the Ireland resident card and was granted a UK family permit without showing any self-assessments etc, just the tax reg letter.

[Brigid from Ireland]

In my opinion you must file the paperwork for 2013 and 2014. The right of your husband is based on you being a self employed migrant worker, so you must complete all the paperwork and show you paid prsi/tax (on a small profit this will be about 600 euro). You must file for the year 2013, and can file in Jan 2014.

You should also file for 2014, and can complete the tax return when you close the business. So if you work in January and February and return to UK in March 2014, then you write to tax office, say you closed the business in Feb 2014, made a profit of 1400 euro in the two months of 2014, and they will calculate any tax due or prsi (it will be a small amount again).

Filing the tax return for 2013 and 2014 generates the necessary paperwork for your husband to enjoy the rights of a spouse of a migrant worker. If you fail to file for both years, or if you do not pay the tax/prsi, then he can lose his rights, as you have no paperwork to show as proof that he is the spouse of a migrant worker.

Officials keep asking for paperwork, if you do not pay the tax office you will not get the paperwork.

[CheGuevara]

A self employed person who never paid taxes, she traded on eBay and other platforms for over 5 years and she is the spouse of an EU citizen who was exercising treaty rights - can she back date her taxes let's say pay 5 years and if it is possible how can she go about doing that.

[Latintraveller]

She would be liable for tax if earning over the tax thresholds. If she is liable for unpaid tax over the past five years she may be on thin ice legally as the tax office expects a declaration yearly and the tax to be paid. If tax if outstanding from five years ago there will be many penalties to pay.

You may be referring to social insurance though. In the UK you can easily pay missed years (about £600 a year). In Ireland it is more difficult. To get a non-means tested pension here I believe you must have paid PRSI for ten years. If though you pay this year the business has a profit of €5k or more you must pay PRSI (€500 if you are a tax payer or €310 if you are below the tax threshold). Even though you plan to move back to the UK this may be transferred to the UK six months before retiring and added to your UK pension.

http://www.welfare.ie/en/downloads/12882_prsi2013.pdf

[CheGuevara]

So basically no chance of paying back taxes for five years

[Latintraveller]

Why would it be to her advantage to pay tax back for the previous five years? Was she over the tax threshold? Are you referring to trading in Ireland or UK over these five years?

[Brigid from Ireland]

Hi Jellybean,

It is really important that you pay the tax/prsi, as that generates the documents that you need as proof of having worked in Ireland. If the profit is small, the tax/prsi is small. It is also important that you close your business by paying tax for Jan/Feb 2014 (it is small again as you are prob only making about 600 euro per month in profit and the tax on that is very small) and then Revenue are finished with you and you have the necessary paperwork.

Hi Che.,

The question is why does she want to pay back taxes and also if she earned enough to make this a large sum.

Revenue have no objection to people making a declaration that tax is due and paying it, so she can do this easily, it just has the possibility that it will be expensive, depending on the amount of profit made and also on the arguement she makes as to the reason why she did not pay on time. If her literacy is poor and her English is poor this is an arguement in her favour that there should be no penalties.

Has she come to the attention of Revenue? If yes, then she needs to pay up.

Is she planning a baby - if this is the issue there is the possibility that her profit was small and not relevant for the first few years, and it is only the tax that was due last October that she needs to pay. She should check based on baby due date if paying for the year 2012 (due in Oct 2013) would be sufficient for maternity benefit.

[Jellybean105]

I understand what you are saying and that it will help prove self-employment but I have genuinely been doing business. I thought it doesn't matter exactly how much an eu-citizen is earning to be exercising the EU treaty rights. I don't know how I can show a profit of 5k plus, if its not accountable for in my statements.

On the EEA2 form it says to provide atleast one of the following:
Invoices/receipts
Accountants letter
Business bank statements.

In addition you can include the following:
A lease on business premises(if applicable)
HM Revenue & Customs (HMRC) self-assessment forms (if applicable)
Evidence of National Insurance Contribution

I can provide business statements showing income from online business revenues, invoices and receipts. Also, when can I/do I pay Ni contributions? If I'm under the threshold, I can pay voluntarily right?

If I have already got a UK family permit with the current documents to prove I am exercising my EU Treaty rights, will that not be sufficient for the UK resident card as well?

I don't have a problem paying tax on 5k plus profit, but I just don't know how to justify it.

Thank you for your help!

[Brigid from Ireland]

You must be honest, and you must declare the accurate earnings/profit.

I was speaking in general terms when I said that people should try to make a profit of at least 5k per year, as a profit in excess of this amount gives strong rights that are difficult to argue with. I think that your case is not as strong if you do not make this amount, but I also think that it may be strong enough to succeed, particularly as you seem good with paperwork, and public servants love paperwork.

NI = the UK phrase national insurance
PRSI = The Irish phrase pay related social insurance

They are much the same thing, just a slightly different name. The question of paying voluntary contributions is one of the problems you face if your profit is not big enough to require payment of proper contributions (profit 5K required for these, last time I checked). Payment of voluntary prsi contributions is possible only for certain categories of people, and I do not know if you can fit it any of the categories. It is complicated and it is closely supervised, as payment of voluntary contributions which cost a very small amount of money can confer rights to payments worth hundreds of thousands of euros over a lifetime. It is supervised because of the cost of these benefits, not from an immigration viewpoint.

I don't suppose you have a dependent child - there is a voluntary contribution (actually a free one) which the parent of a dependent child can sometimes claim -it is given automaticallly if you are getting child benefit for a child and meet certain other conditions.

[Jellybean105]

Thank you Brigid for your help

I will sort out the accounts and see what figures I am left with and will go from there! (No I don't have any children).
Are there any other documents that would help me prove self-employment?

[Brigid from Ireland]

Just noticed your husband's card is due in Feb.

I would be inclined not to communicate with the tax office until AFTER the card is issued, as the accounts are not due in until October anyway, and Feb is now very close.

If he gets the card I would then contact the tax office, declare the profit/loss and close the self employment account. That should generate a letter to say you have ceased self employment in Ireland, and together with the letter from Revenue which states you started self employment, I think you would be ok.