Guide To Ireland Expat Tax Advice
The Tax Samaritan country guide to Ireland Expat Tax advice is intended to provide a general review of the tax environment of Ireland and how that will impact your U.S. expatriate tax return as a U.S. Expat in Ireland.
As a U.S. taxpayer, all worldwide income is subject to taxation and reporting and for most expatriates you are required to file a U.S. tax return on an annual basis due on April 15 each year (June 15 if you are residing overseas on the April 15 deadline). The tax treatment for different classes of income can vary greatly from Ireland and the U.S. For example, certain benefits may be tax free or excluded from taxable income in Ireland, but in the U.S. these benefits are likely to be non-qualified benefits that are subject to being included as taxable income in U.S. As such, there are a number of considerations related to Ireland Expat Tax and this brief article will address a few of those considerations.
US Expat Living In Ireland
The Emerald Isle, as it is sometimes referred to, is a popular retirement spot for American expats. More than 34 million Americans claim Irish ancestry so it is no surprise that many Americans are choosing to go back to their roots and settle in Ireland. The island’s landscape features medieval stone castles, lush rolling hills and quaint cobblestone-paved towns. Farms dotted with grazing livestock and wooden farmhouses line the countryside. If you are thinking of relocating to Ireland, here are 3 of the best places to live:
- Waterford: This coastal city located in southeast Ireland has a magical feel. It is a lovely town at night when it is all lit up. The lights of waterfront Georgian townhouses that line the quay twinkle in the harbor and Reginald’s Tower looks majestic standing guard over the city as it has since the 11th century.
- Dublin: Dublin is the city that most tourists are familiar with when they hear the word Ireland. It is the country’s largest city and offers lots of outdoor recreation, cultural riches and a high quality of life. Dublin is quite the cosmopolitan city, yet offers a more intimate feel than some of the other large cities in the United States. What sets Dublin apart from other cities elsewhere is its storied political and literary history.
- Killarney: Killarney is a city located on the southern coast of Ireland. It is one of the most beautiful cities in Ireland offering residents stunning scenery. This lovely town is located within close proximity to a number of beautiful waterfalls, lakes and woodlands. This small, cozy city has plenty of excellent eateries, a compact walkable downtown and great golf courses.
Guide to Expat Tax in Ireland
As a United States taxpayer, it is important to understand how living in Ireland will impact your taxes. If you are an American citizen, all income that you earn worldwide is subject to reporting and taxation. You are required to file a United States tax return with the Internal Revenue Service every year, no matter which country you currently live. Therefore, most expatriates living in Ireland will be required to file a United States tax return every year before June 15th
Who Is Liable For Income Taxes In Ireland
If you are an American living in Ireland, you must include income that is earned in Ireland and elsewhere in the world on your United States tax return every year. This includes income that is subject to tax in Ireland.
What Are Special Provisions That Help Protect American Citizens From Being Taxed Twice?
The amount of money that you pay in taxes to the United States might be lowered by deductions and credits that are from income that you earn in Ireland. Here are a few exclusions that can help reduce double taxation for expats living in Ireland.
- With the Foreign Housing Exclusion, you can exclude some household expenses that you incur as a result of living in Ireland or elsewhere abroad. The housing expenses must meet a certain threshold to apply for the exclusion.
- The Foreign Tax Credit allows you to exclude income earned in Ireland from your United States tax return.
- Up to $101,300 of foreign income can be excluded from your United States taxes for 2016 with the Foreign Earned Income Exclusion.
How Is Income Taxed in Ireland?
Irish residents that are domiciled have to pay taxes on worldwide income. Irish considers residents to be domiciled if Ireland is their permanent home. If you currently live in Ireland but plan to return to the United States at some point in the future, then you are not considered to be domiciled in Ireland, although you may be an Irish resident.
Ireland taxes domiciled residents based on a remittance basis. This means that domiciled residents are taxed on earnings from Ireland as well as employment earned elsewhere but paid to Ireland. One benefit to expats is the fact that if you keep your main residence in the United States, rather than Ireland and retain investments outside of the Ireland, income earned from investments will only be subject to taxes in Ireland if you bring it into the country. This means that expats will not be subject to double taxation.
How Do I Know If I Am Considered to Be an Irish Tax Resident?
You are considered to be an Irish resident if you spend more than 182 days a year in the country or 280 days total in the last two tax years.
Tax Filing Payment Rules and Tax Withholding in Ireland
Similar to how most United States employers deduct taxes, expats that are employed in Ireland have their income tax automatically deducted from pay. Ireland has an advantage over the U.S. when it comes to filing returns. The deductions that are taken out of your paycheck are automatically adjusted and include all of the credits and tax rates that you are eligible to receive. That means that expats do not have to file a separate Irish tax return as everything is automatically taken out of your pay.
When you begin working in Ireland, you will fill out several forms to ensure that of the tax credits that you are eligible for are automatically applied. Although, if you have self-employment earnings in Ireland, you will be required to file an Irish tax return every year. Ireland’s due date for tax returns is Oct. 31st of each year. Whether your Ireland tax return is automatically filed or not, remember that you will still need to file a United States tax return by June 15th for each year.
Below is our Ireland Expat Tax advice for your US expat tax return:
- If you are a U.S. citizen or a resident alien of the United States and you live in Ireland, your US expat tax return in Ireland is based on your worldwide income and as such you must file a U.S. return for all the years that you are residing in Ireland. However, as a U.S. expat you may qualify to reduce your U.S. taxable income up to an amount of your foreign earnings that is adjusted annually for inflation ($102,100 for 2017). In addition, you can exclude or deduct certain foreign housing amounts. This is known as the Foreign Earned Income Exclusion and foreign housing exclusion .
- When it comes to your Ireland Expat Tax, most US expatriates worry about “double taxation” – paying taxes to two different countries – the U.S. and Ireland. A U.S. taxpayer working overseas in Ireland may be able to reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116. Should any foreign income not be fully offset by the foreign earned income exclusion, housing exclusion or housing deduction, the foreign tax credit paid or accrued may be used as a deduction or credit on the U.S. tax return. Taxpayers can elect to either deduct the taxes as an itemized deduction on Schedule A or claim a credit against tax. In most cases, it is to your advantage to take foreign income taxes as a tax credit.
A common but dangerous mistake is the assumption that if there are zero taxes owed with these tax benefits that a US tax return while living in Ireland does not need to be filed. That is not true. If you are working overseas, it is likely that you meet the filing requirements to file a tax return and must do so. It is important to note that these tax benefits, such as the foreign earned income exclusion and foreign tax credit are not applicable to the outcome of your tax liability and tax return until they are claimed on a filed tax return. So, be sure to file your US expat tax return!!!
When it comes to Ireland expat tax advice there are many tax items to consider, but the above are by far the most common tax benefits. With top-notch experienced and knowledgeable expat tax preparation from Tax Samaritan, you can be assured that you are paying the minimal amount of U.S. taxes that you are legally obligated for.
U.S.- Ireland Tax Treaty And Tax Relief For Ireland Expat Tax
The U.S. does have a tax treaty with Ireland.
Please click on the link to the U.S. – Ireland Tax Treaty .
Ireland Foreign Bank Account Reporting – The FBAR (FinCen Form 114)
Another important tax deadline that frequently applies to Ireland Expat Tax is in regards to the disclosure of foreign assets on the FBAR (Foreign Bank Account Report – Form 114 – formerly known as TD F 90-22.1).
The FBAR filing deadline is April 15th. Unfortunately, requesting an extension on your individual return does not extend the FBAR due date – there is no extension available for the FBAR deadline. Any reports filed after this date are considered a delinquent FBAR. In addition, the FBAR is different than many other tax forms in that it must be received by the deadline date (and not postmarked by the deadline date).
The FBAR must be filed with the Treasury Department (it is not filed with your federal income tax return) whenever you meet the FBAR filing requirements, which in a nutshell is whenever a U.S. person has a financial interest in, or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust or other type of foreign financial account (including an insurance policy with a cash value such as a whole life insurance policy) maintained with a financial institution, with an aggregate value of over $10,000 at any time during the calendar year based on the highest value of each foreign account during the tax year.
If you have bank accounts Bank of Ireland, Allied Irish Banks, Danske Bank, Ulster Bank or at another bank in Ireland or any other foreign country, you may meet the filing requirement to disclosure your foreign accounts on the FBAR. Please don’t hesitate to contact Tax Samaritan to learn more about your filing requirements.
Qualified Dividends In Ireland For Your Foreign Corporation or Investment
Since 2003, dividends paid to individual shareholders from either a domestic corporation or a “qualified foreign corporation” are subject to tax at the reduced rates applicable to certain capital gains. A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States. Ireland foreign corporations are eligible for this lower “qualified” dividend rate and can be a significant benefit for reduced Ireland Expat Tax.
U.S. – Ireland Social Security Totalization Agreement
The United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country.
As of this time, Ireland has entered into a Totalization Agreement with the United States thus there is opportunity to avoid double taxation of social security income for Ireland Expat Tax.
Click here to read more on the US – Ireland Totalization Agreement .
Testimonial Of Clients Residing In Ireland
We have many expat tax preparation clients that live and work in Ireland. Below are a few tax preparation testimonials of clients in Ireland for your review, however we encourage you to view recommendations left for us on our LinkedIn page. These are independent tax preparation testimonials from real customers, with tax situations just like “yours”. If you are unable to view our testimonials, please “connect” with us on LinkedIn for access. Otherwise, please view our Tax Testimonial snapshot.
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Read our tax preparation testimonials and BBB Rating and Reviews to see what our clients have to say about working with Tax Samaritan for their income tax preparation and tax problem resolution needs.
Our goal at Tax Samaritan is to provide the best counsel, advocacy and personal service for our Ireland Expat Tax. We are not only tax preparation and representation experts, but strive to become valued business partners to American expatriates in Ireland. Tax Samaritan is committed to understanding our client’s unique needs; every tax situation is different and requires a personal approach in providing realistic and effective solutions.
Request A Tax Preparation Quote
Click the button below to request a Tax Preparation Quote today to get started with the preparation of your return for your Ireland Expat Tax or to request a free 30-minute tax consultation.
Tax Samaritan is a team of Enrolled Agents with over 25 years of experience focusing on Ireland Expat Tax and throughout the world. We maintain this tax blog where all articles are written by Enrolled Agents. Our main objective is to educate US taxpayers on their tax responsibilities and the selection of a tax professional. Our articles are also designed to help taxpayers looking to self prepare, providing specific tips and pitfalls to avoid.
When looking for a tax professional, choose carefully. We recommend that you hire a credentialed tax professional such as Tax Samaritan that is an Enrolled Agent (America’s Tax Experts) that is experienced and knowledgeable about Ireland Expat Tax. If you are a US taxpayer overseas, we further recommend that you seek a professional who is experienced in expat tax preparation, like Tax Samaritan (most tax professionals have limited to no experience with the unique tax issues of expat taxpayers).
Randall Brody is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals and experienced with Ireland Expat Tax. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation, fulfill continuing education credits and adhere to a stringent code of ethics.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional Ireland Expat Tax advice based on your individual needs.
FAQs
How much tax do expats pay in Ireland? ›
| Marital Status | Taxable Income (€) | Rate of income tax |
|---|---|---|
| Single | 0 – 36,800 | 20% |
| 36,800.01+ | 40% | |
| Married couple with one Income source | 0-45,800 | 20% |
| 45,800.01+ | 40% |
As a US citizen, you are required to file an annual United States tax return no matter how long you have lived in Ireland. You will also need to file a return with the Irish government. Both nations adhere to a standard tax year, which mirrors the calendar year.
Do Ireland and the US have a double taxation agreement? ›In 1997 a new double taxation treaty between Ireland and the United States was signed, replacing the existing treaty which was in force since 1951.
How much foreign income can be excluded? ›However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
Is US Social Security taxed in Ireland? ›In general, foreign pensions (including UK and US pensions) are taxable sources of income in Ireland. They are liable to Income Tax (IT) and Universal Social Charge (USC), but not Pay Related Social Insurance (PRSI).
Do expats pay taxes in two countries? ›But for expats, double taxation typically refers to having their income taxed by the US as well as the country they've made their home in. The US is one of only two countries in the world with citizenship-based taxation. (The other is Eritrea.)
Can I retire in Ireland if I am a US citizen? ›Retiring to Ireland
You must be able to prove to the Irish Naturalization and Immigration Service (INIS) that you have sufficient resources to support yourself and obtain permission to remain by registering with your local immigration registration officer following your arrival in Ireland.
Fortunately, United States citizens do not need a visa when visiting Ireland for 90 days when on business or vacation. The D-visa category is a single entry and is long-term. The visa allows you to study work and settle there permanently.
Can an American move to Ireland for a year? ›Before heading across the pond, it's best to consult current travel requirements, but it is possible for an American to move to Ireland. To enter the country, you'll need a current passport, and if you intend on staying longer than 90 days, you will need to obtain permission and documentation from Irish officials.
Can I collect Social Security if I live in Ireland? ›Normally, people who are not U.S. citizens may receive U.S. Social Security benefits while outside the U.S. only if they meet certain requirements. Under the agreement, however, you may receive benefits as long as you reside in Ireland regardless of your nationality.
What is the double Irish tax loophole? ›
The double Irish Dutch sandwich is a tax avoidance scheme used by multinational companies. Under this scheme, a company sets up two subsidiaries in Ireland: a holding and operating Irish company. The holding company registers in a tax haven, which allows it to avoid paying taxes on its profits.
Do foreigners pay tax in Ireland? ›If you are resident for tax purposes but not domiciled in Ireland, you pay Irish tax on your Irish income and any foreign income that you remit to Ireland. You remit income if you send it to Ireland from abroad by wire, mail or online transfer.
What is the 330 day rule? ›Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period including some part of the year at issue. You can count days you spent abroad for any reason, so long as your tax home is in a foreign country.
Are US citizens taxed on worldwide income? ›In general, yes — Americans must pay U.S. taxes on foreign income. The U.S. is one of only two countries in the world where taxes are based on citizenship, not place of residency. If you're considered a U.S. citizen or U.S. permanent resident, you pay income tax regardless where the income was earned.
How much income can a US expat exclude? ›Key Takeaways. The Foreign Earned Income Exclusion (FEIE) is a US tax benefit that allows you to exclude from taxation a certain amount of foreign-earned income over $100,000. The maximum foreign-earned income exclusion for the 2022 tax year is $112,000.
Is it cheaper to live in Ireland than the US? ›Cost of Retiring in Ireland
However, that doesn't necessarily mean the country is cheap, either. According to July 2022 data from Numbeo.com, a site that measures the cost of living of various countries around the world, average prices in Ireland are, on average, a mere 2.95% lower than in the U.S.
All pensions (annuities) are taxable as income under the PAYE system and are also subject to the Universal Social Charge, but not PRSI. State pensions are taxable, although they are paid without tax being deducted.
What is considered a lot of money in Ireland? ›An annual income of €100,000 is chosen as representing very high income earners – it represents the top 6.5% of earners (180,000 earners) according to Revenue Commissioners data and is well over twice average earnings.
How do expats avoid taxes? ›The Foreign Earned Income Exclusion – The FEIE is the most common and broadest aid to prevent double-taxation. You qualify if you live and work overseas and pass either the Bona Fide Residency test or the Physical Presence Test. If you qualify, you can exclude up to $108,700 for tax year 2021, and $112,000 for 2022.
How do taxes work for expats? ›American expats must file a federal tax return and possibly pay U.S. taxes if they earn above a minimum income threshold are typically eligible for an automatic 2-month extension to file, but not to pay any owed taxes. The IRS has special rules that allow American expats to lower their taxable income.
How does taxation work for expats? ›
Do Expats File US Taxes? Yes, virtually all US citizens are required to file a US Federal Tax Return regardless of where they live in the world. This applies as long as your worldwide income exceeds the filing threshold (which varies by filing status).
How much money do you need to retire comfortably in Ireland? ›A good rule of thumb of what to aim for at retirement is approximately 50% of your gross pre-retirement income. If you earn €70,000 per annum on the day you retire, €35,000 would be an appropriate number to aim for.
Can Americans buy property in Ireland? ›There are no residency-based restrictions to buying property in Ireland. You can buy property here if you are an Irish citizen, EU/EEA citizen, non-EEA national or even non-resident in Ireland. However, owning property in Ireland does not mean you have the right to live here.
Can I get my US pension if I live abroad? ›If you earned Social Security benefits, you can visit or live in most foreign countries and still receive payments. Look up the country on the SSA Payments Abroad Screening Tool to be sure you can receive your payments.
Can I drive in Ireland with a US license? ›U.S. citizens are permitted to drive in Ireland for the duration of a visit up to 12 months as a tourist. If you wish to apply for an International Permit for use during your visit you can apply through the AAA in the U.S. – you can find more information here .
How hard is it for an American to become an Irish citizen? ›You must show that you built up enough reckonable residence on the island of Ireland to be granted citizenship, specifically: 1095 or 1096 days of reckonable residence based on your accumulated permission stamps. This includes 365 or 366 days (1 year) of continuous residence immediately before the date you apply.
What is it like for an American to live in Ireland? ›It's not just a great place to work – it's also a great place to live. In one study, Ireland ranked 23rd out of 65 countries in terms of friendliness. Nearly half of all survey expats gave Ireland full marks for being a welcoming destination. Additionally, seven out of ten expats say they feel at home in Ireland.
Do the Irish like American tourists? ›The Irish and the Northern Irish Generally Like Americans
Other than that, there is a shared sense of humour and a shared language, so we always get on well with American tourists.
The estimated monthly costs for a family of four is equivalent to $5,317 a month. The estimated monthly costs for a single person living in Ireland is $3,049. Overall, the cost of living in Ireland is slightly higher than that of the United States.
How much do houses cost in Ireland? ›The average house price has reached a new record of €359,000 in Ireland, a rise of more than €1,300 a month in a year, the latest figures show. The Central Statistics Office has revealed that, last year, that figure stood at €343,250. That means house prices have risen by almost 9% year-on-year.
How do I get the $16728 Social Security bonus? ›
To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.
What is the Social Security 5 year rule? ›You must have worked and paid Social Security taxes in five of the last 10 years. • If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.
What happens to my Social Security if I leave the US? ›If you leave the U.S., we will stop your benefits the month after the sixth calendar month in a row that you are outside the country. You can make visits to the United States for specific periods of time, depending on how long you've been outside, to continue receiving your benefits.
How can I reduce my Irish tax? ›- Invest in a self-employed pension To Reduce Tax. ...
- Claim your Business-related Expenses. ...
- Claim your home office expenses. ...
- Claim your travel expenses. ...
- Claim your marketing & advertising expenses. ...
- Set aside 30% of your profit. ...
- Track all your expenses and keep receipts.
The double Irish with a Dutch sandwich is a tax avoidance technique employed by certain large corporations. The scheme involves sending profits first through one Irish company, then to a Dutch company and finally to a second Irish company headquartered in a tax haven.
What is the Dutch sandwich? ›Dutch sandwich (plural Dutch sandwiches) (finance) A form of tax avoidance, based on the Double Irish arrangement, in which revenues from income of sales of the products shipped by the second Irish company are first booked by a shell company in the Netherlands, taking advantage of generous tax laws there.
What income is exempt from tax in Ireland? ›This means that if you earn €17,000 or less you do not pay any income tax (because your tax credits of €3,550 are more than or equal to the amount of tax you are due to pay). However you may need to pay a Universal Social Charge (if your income is over €13,000) and PRSI (depending on how much you earn each week).
What is the 183 day rule in Ireland? ›A tax year runs from 1 January to 31 December. You are resident for tax purposes for a year if: You spend 183 days or more in Ireland in that year or, If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year.
Is Ireland a good tax haven? ›Ireland has received the most U.S. corporate tax inversions of any global jurisdiction, or tax haven, since the first U.S. tax inversion in 1983.
Is Ireland expensive for expats? ›Expats will find that the cost of living in Ireland is manageable but varies depending on the town or city, with Dublin being the most expensive place to live. The Mercer Cost of Living Survey for 2022 confirms this, and ranked Dublin as the 49th most expensive city out of the 227 cities surveyed worldwide.
Do you have to pay Irish taxes if you live abroad? ›
You may be going abroad to work but remain tax resident in Ireland. If so, you will be required to pay Irish tax on your total worldwide income. If you are tax resident in Ireland you are entitled to full tax credits.
What is the 183 tax rule in Ireland? ›A tax year runs from 1 January to 31 December. You are resident for tax purposes for a year if: You spend 183 days or more in Ireland in that year or, If you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year.
How much are taxes in Ireland compared to the US? ›In the U.S., the average sales tax is 7%. In Ireland, the average sales tax (VAT) is 23%.
Is Ireland friendly to American expats? ›Every year, the small yet welcoming country attracts many expats from across the world for many reasons. For starters, the Irish are known for being friendly, and Ireland is famous for its natural beauty. Moreover, the architecture and modern houses make Ireland ideal for you and your family to move to.
Are American expats welcome in Ireland? ›The Expats Guide To Moving to Ireland
It's not just a great place to work – it's also a great place to live. In one study, Ireland ranked 23rd out of 65 countries in terms of friendliness. Nearly half of all survey expats gave Ireland full marks for being a welcoming destination.
At a country level, the cost of living in Ireland, including housing, is only 10% lower than the cost of living in the USA. However, the United States has many cities that are cheaper to live in than similar cities in Ireland.
Can I collect Social Security if I move to Ireland from USA? ›If you have Social Security credits in both the United States and Ireland, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.
Can I keep my Irish bank account when I move abroad? ›In short, yes. You will need to inform your banking provider that you intend to close your account. However, it might be worthwhile keeping it open until you have an opportunity to open a new account in the country you're moving to. This will depend on how you intend to access your money of course.
How can I avoid tax residency in Ireland? ›183 days or more in a tax year. or. 280 days or more in total, taking the current tax year plus the preceding tax year together. You will not be resident in Ireland if you are here for 30 days or less in a tax year.
What is the 7 year tax rule in Ireland? ›If you die within 7 years of gifting an asset to an individual, the 7 year gift rule in inheritance tax means that the beneficiary may be required to pay IHT.
How much foreign income is tax free in Ireland? ›
You may have to pay a domicile levy if: You are Irish domiciled. Your worldwide income in the year exceeds €1m.
How much money do you need to live comfortably in Ireland? ›Summary of cost of living in Ireland: A family of four estimated monthly costs are 3,541.2$ (3,310.1€) without rent. A single person estimated monthly costs are 1,012.6$ (946.5€) without rent. Cost of living in Ireland is, on average, 4.0% lower than in United States.
Is Ireland tax friendly? ›Ireland has received the most U.S. corporate tax inversions of any global jurisdiction, or tax haven, since the first U.S. tax inversion in 1983.
Are US taxes higher than Europe? ›the USA ones may look unreasonable. In contrast to the US combined rate of 15.3%, European rates range between 13.97% (not including medical insurance and pension contributions) in Switzerland and a whopping 65-68% in France, based on the 2022 table by Trading Economics. Speaking about European taxes vs.