My son is in his thirties. He was born and reared in Ireland and, after graduating from UCD and working in Ireland for a while, he moved to a new job in Switzerland.
His goal in moving was to save enough money there to be able to return to Ireland with a large deposit to buy his first home. He believed that by remaining in Ireland, he would not be able to save sufficient money to do this.
Having worked hard and lived frugally for the past few years, he has now saved approximately €250,000 net of all relevant Swiss taxes, and is planning to return to Ireland later this year and to purchase his first home.
My questions are: how can he do this? Can he simply transfer this money from his Swiss bank account into his Irish account?
Are there any further tax implications of bringing this money into Ireland?
Will he qualify as a first-time buyer for grants, etc? (I expect that he will, as that is what he is)? Are there any other issues he should be aware of?
Mr RP
Your son is far from alone. Ireland is now replete with stories of people who have decided that they will never be able to save enough for a home deposit because of the current level of rent. A number of these decide to move abroad, some for the experience as well as the opportunity to build up savings; others permanently.
In your son’s case, he has now amassed significant savings and wants to come home and buy a property.
The good news is that there is nothing to stop him doing so. There are still controls on bringing large amounts of cash into Ireland, or elsewhere in the EU, from outside the bloc but not on the bank-to-bank transfer into Ireland of tax-compliant funds.
Switzerland is part of the Single European Payments Area (Sepa), as is Ireland. That means he can transfer the funds directly from his Swiss bank to his Irish one, assuming he still has an account over here.
You may have read that there was a €100,000 transfer limit under Sepa but this is only under Sepa Instant, one of the three Sepa transfer channels. His bank in Switzerland would instead use Sepa Credit Transfer, under which the limit is a fraction under €1 billion.
Of course, if he does not have a bank here still, he will need to set up a new account. To abide with money-laundering legislation, he will need proof of identity and of address. The latter could prove a challenge if he has not been here for a number of years and has no documentation with an Irish address.
If there is any difficulty on this front, he should get in touch with the bank at which he is opening his account for options. He’ll need to attend in person anyway in all likelihood to open an account.
That aside, there should be no tax liabilities for him on this transfer. He is clearly Irish domiciled but he has not been tax-resident here for a number of years. So any tax due on these funds will have been due in Switzerland and, as you say, he is already fully tax-compliant there.
However, he should not be surprised or alarmed by queries from the Irish bank on the source of his funds. They have an obligation to satisfy themselves that the funds coming into an account at their bank do not come from untaxed offshore assets. It would be sensible to have account statements and so on to reassure on any such queries.
A set of common reporting standards set up under the OECD means that banks across more than 100 countries worldwide now communicate with each other on an annual basis to help ensure there is no tax evasion on offshore assets. That means, for instance, that if he returned home but left the money in his Swiss bank, the two jurisdictions would communicate so that the Revenue Commissioners were aware of that.
I’m conscious that’s not his plan but just in case.
Obviously once the money is on deposit in Ireland, he will be liable to deposit interest retention tax (DIRT), currently charged at 33 per cent, on any further interest he earns on the money.
Borrowers who are divorced or separated or those who have suffered bankruptcy or insolvency man now be considered first-time buyers in mortgage terms as long as they no longer have any interest in any property
Moving on to your other query, whether he qualifies for first-time buyer grants will depend on whether he has ever owned property.
He clearly didn’t here in Ireland before he moved abroad and I am assuming from what you say about the purpose of his working abroad that he has not bought property in Switzerland. But if he has – even a share in a property – that could exclude him from first-time buyer status in Ireland.
Some people presume that by staying quiet on the issue of previous foreign property ownership, they can avail of first-time buyer status. The raft of checks within and beyond the EU on property ownership and bank account activity mean this is a high-risk game that could land them in trouble with the tax authorities.
In your son’s case, he is eligible as a first-time buyer. However, I am not sure what benefit if any that will be to him.
He will not be able to avail of help-to-buy as he has no tax paid here in the past four years, and the Rebuilding Ireland scheme is focused on people who have been refused a mortgage, which sounds unlikely in his case on the basis of the money he brings to the table – depending, of course, on the property he intends to acquire and his ongoing income once he gets home. Shared equity and mortgage allowance also do not seem relevant in his case.
One last thing on the issue of first-time buyers that may interest some readers – though it is not relevant to your son’s case: the Central Bank last year widened its definition of who can be considered a first-time buyer for the first time in many years. Under what it termed “fresh start”, it has decided that borrowers who are divorced or separated or those who have suffered bankruptcy or insolvency man now be considered first-time buyers in mortgage terms as long as they no longer have any interest in any property.
To some degree, this takes account of the societal reality where households no longer follow strict historical norms. It also offers opportunity for many of those who were caught up in the fallout from the financial crash. Of course, you still have to persuade a bank to lend, and that’s a different challenge.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
