Yeh me and my kids will be paying for a long time for the worlds biggest banking (per capita) debacle and the destruction of the economy in the 00s by various governments. With kids its sort of hard to leave :( Tho' it is a nice place to live despite all the carry on.
But hey look over there at the news yet another multinational setting up to launder/funnel money onto somewhere warmer and seems like a housing bubble is re-inflating again.
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edit: last year i arranged my salary to remain under the high tax rate band
Gross: €32.6 K
Net (after PAYE,PRSI,USC): €25 K
The accountant said that above this €32K line i would have lost about ~53 cents in taxes for each €1.00 earned by ending up in the highest tax band...
So I left the extra money in company (corporation tax 12.5%) and will spread out my wages over few years, tho is risky practice if the company gets sued and loses the money.
There is an option to pay into a pension but with the pension funds being so mismanaged and the government actively robbing all pensions and destroying the pension reserve that would be downright stupid.
Set up a trust or a separate management company that cannot be easily sued (only one client: your other business). If for some reason Irish tax law doesn't work for this case, you can probably set up a foreign owned management company or quality assurance company. Another option is to buy business insurance for lawsuits, though really do you research and record the call you have with the rep because he will promise you things that are not true. If you don't have one party consent for phone calls in Ireland do it from a country that does.
Yeh the problem is you do not want to cross Revenue, they do assume your are guilty and you have to prove your innocence when it comes to tax matters. Best if possible not do anything which they might interpret as dodgy.
I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!"
Edit: On second reading, I think I understand what the OP is talking about: leaving money in the company they operate, which pays out (I guess through dividends?) at a lesser tax rate than if it were paid out directly as wages. I'm pretty sure this is a standard technique in the rest of the world, and not particularly unique to Ireland.
Does any country out there not tax progressively?
I just can't imagine it - "Great, you got a pay rise! Now
you get to take home less, until your pay rises by
another $5,000!"
He's just whining. At no point under the progressive tax system do you get penalized for earning more: the first $35K of your income is still taxed at the lower rate. When you earn dollar number 35,001, that dollar is taxed at 53%, but your average tax rate only goes up a hundredth of a percent.
This misunderstanding of how tax brackets is so widely pervasive that I can only assume it's the work of enemy action: people who want to reduce income taxes, or to move the tax burden to the poor by implementing a flat tax rate.
He's still paying a significantly higher tax rate on that dollar than if he didn't earn it this year.
If he is not hurting for cash and he could defer it until next year (or year after that) with no penalty at all and (arguably) negligible risk, thus paying the lower personal income tax rate on that dollar, why not do it?
I don't see what part is misunderstood. If you're being paid by your employer, obviously you want to take the raise regardless of higher taxes. If you are your own employer, both entities are paying taxes and each dollar of taxes paid is coming out of your own pocket.
That's approximately how I read it. Even if it's his company, money he puts in his own pocket needs to have income tax paid on it (I would suppose this means, after any appropriate corporate taxes are paid by the corporation).
If the money does not actually leave the company and go into his pocket, the only taxes that would need to be paid are those (low) corporate taxes.
Of what value is money you can't have in your pocket and spend, of course, is an exercise for the reader, but presumably it could be paid out as personal income over a greater number of years (if the company survives that long) without ever paying $0.53/1.00 in personal income taxes on any portion of that money.
This is what I do. I worked hard for three years, pay myself a wage thats in the minimum pay bracket and will travel until the company money is gone. I'm not give a cent more than I have to to those crooks.
But hey look over there at the news yet another multinational setting up to launder/funnel money onto somewhere warmer and seems like a housing bubble is re-inflating again.
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edit: last year i arranged my salary to remain under the high tax rate band Gross: €32.6 K Net (after PAYE,PRSI,USC): €25 K
The accountant said that above this €32K line i would have lost about ~53 cents in taxes for each €1.00 earned by ending up in the highest tax band...
So I left the extra money in company (corporation tax 12.5%) and will spread out my wages over few years, tho is risky practice if the company gets sued and loses the money.
There is an option to pay into a pension but with the pension funds being so mismanaged and the government actively robbing all pensions and destroying the pension reserve that would be downright stupid.