What is split year treatment?
In practice, as shown in the previous example, you will usually take up residence in Ireland at some time in the middle of the tax year. This means you will have foreign income arising up to the date on which you arrive in Ireland. Similarly, when leaving Ireland, you will have Irish income arising up to the date you leave, and foreign income thereafter.
Without a special rule for such cases, you could end up being taxed in both countries. The special rule, known as split-year treatment (SYT) applies only to employment income. It does not apply to income from an office, for example, a directorship.
Split-year treatment ensures that if you are coming to Ireland to take up an employment, and you:
(a) were not resident in Ireland in the previous tax year, and
(b) show that you intend to be resident in the following tax year,
you are subject to Irish tax on your employment income only from the date you arrive in Ireland. You are liable to Irish tax on your non-employment income (for example, investment income) in the part of the year up to your arrival in Ireland. You can claim a credit for tax paid on such income if Ireland has a tax treaty with the country in which the income arose.
Similarly, if you leave Ireland to take up an employment abroad, and you:
(a) are resident in Ireland in the current tax year, and
(b) show that you intend to leave Ireland other than for temporary reasons, and that you will be non-resident in the following tax year,
you are subject to Irish tax on your employment income only up to the date you leave Ireland. You are liable to Irish tax on your non-employment income (for example, investment income) in the part of the tax year after you leave Ireland. You can claim a credit for tax paid on such income if Ireland has a tax treaty with the country in which the income arose.