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Country Tax Update
Changes in expatriate tax
Inflation-indexing has been applied to deduction maximums, the income splitting amount, tax credits based on family size, other credits, and tax brackets. The top marginal tax rate remains at 50%. The social security is unchanged. The net effect is a reduction in tax which varies by income level and family size. Effective for 2022, the expatriate tax concession has been revised substantially. Under the new expat regime, qualifying individuals may claim an exclusion of 30% of gross income, up to EUR 90,000. The ‘deemed nonresident’ provision from the previous expatriate tax concession no longer applies. Transitional rules apply for those individuals who used the old regime. The new expatriate tax concession also applies to social security contributions.
Effective January 1, 2023, the special solidarity contributions for all types of income has been abolished. Previously, private sector employees were exempt from the special solidarity contributions under COVID-19 tax relief. The reduction in social security rates that was due to expire at the end of 2022 have been made permanent. Tax rates, deductions, and credits are unchanged. The net effect is that individual income tax and social security is unchanged for 2023.
For 2023, the tax brackets for income tax and the Universal Social Charge have been indexed for inflation while the rates are unchanged. The top marginal rate for income tax is 40% and for the Universal Social Charge is 8%. The personal allowance credits and PAYE allowance have increased slightly. The net effect of these changes is a small decrease in tax. Social security is unchanged.
The Special Assignment Relief Program (SARP), which allows tax concessions for qualifying inbound employees has been revised and extended to the end of 2025. Qualifying employees arriving prior to 2023 may exempt 30% of employment earnings exceeding EUR 75,000 but no more than EUR 1,000,000 from Irish taxation. For inbound employees arriving in 2023, the earnings threshold is increased to EUR 100,000.
Adjustments have been made to levy rebates, and the levy rebate for a nonworking spouse has been repealed. The calculation of rental value of self-owned residence, the adjustment for the mortgage interest deduction, the maximum contribution for social security (national insurance), family allowances, and the tax rate schedule have been adjusted for inflation. The top marginal tax rate is unchanged at 49.5%. The net effect on social security contributions and tax varies by income level and family size.
Beginning in 2024, the expatriate tax concession known as the 30% ruling will be capped. The threshold is tied to the salary level of certain government administrator which is indexed for inflation annually. Based on the 2023 threshold, the 30% ruling will apply to salary up to EUR 223,000, or a maximum exclusion of EUR 66,900. The 30% ruling values for 2024 have not yet been announced. Income that exceeds the threshold are subject to the top marginal tax rate of 49.5%. The 2023 expat variant model computes the full 30% exclusion.
The Scottish Parliament has implemented tax increases for higher incomes, with tax rate increases for the higher income brackets. The top marginal tax rate increased from 46% to 47%. The personal allowance and social security rates are unchanged. Child benefits for lower incomes has increased. The net effect is an increase in tax for taxable incomes exceeding GBP 43,000. Compared to the U.K., Scottish taxpayers generally pay a higher tax at higher incomes.
There are two new top marginal rates, 23% and 24%, assessed at taxable incomes of SGD 500,000 and SGD 1,000,000, respectively. The net effect is an increase in income tax at higher incomes.
United States Tax Update
At the Federal level for 2023, there have been inflation-indexing adjustments to tax brackets and the standard deduction. There is an increase in the social security wage base. Statistical itemized deductions have been updated based on IRS published information.
The net effect of these changes varies by income level, family size, state selected, and deduction type. If you need help explaining the net time-to-time effect of a particular model, please let us know.
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