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Taxation in Ireland in 2017 came from
Personal Income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
es (40% of Exchequer Tax Revenues, or ETR), and
Consumption tax A consumption tax is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal person, legal entity) by a governmental organization in order to fund government spending and various ...
es, being VAT (27% of ETR) and Excise and Customs duties (12% of ETR).
Corporation tax A corporate tax, also called corporation tax or company tax, is a direct tax Although the actual definitions vary between jurisdictions, in general, a direct tax or income tax is a tax imposed upon a person or property as distinct from a tax i ...
es (16% of ETR) represents most of the balance (to 95% of ETR), but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's ''Hierarchy of Taxes'' pyramid (see graphic), which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes (<3% of ETR, being Stamp duty and LPT) and Capital taxes (<3% of ETR, being CGT and CAT). An issue in comparing the Irish tax system to other economies is adjusting for the artificial inflation of Irish GDP by the
base erosion and profit shifting Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinational companies, multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is ...
(BEPS) tools of U.S. multinationals in Ireland. In 2017, the
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Republic of Ireland, Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categori ...
replaced Irish GDP with Irish GNI* to remove the distortion; 2017 GDP was 162% of 2017 GNI* (EU–28 2017 GDP was 100% of GNI). Properly adjusted, Ireland's Total ''Gross Tax-to-GNI*'' ratio of 36% is in-line with the EU–28 average (36%), and above the OECD average (33%); Ireland's ''Exchequer Tax-to-GNI*'' ratio of 28%, is in line with the EU–28 average (28%), and the OECD average (27%). Within these aggregate taxation metrics, the most distinctive differences between Ireland's taxation system and those of the average EU–28 and OECD taxation systems, are lower net Irish ''Social Security Contributions'' (i.e. PRSI less child benefits), offset by higher Irish Corporation tax receipts. Within Ireland's taxation system, the most distinctive element is the ratio of net Personal Income taxes on higher earners versus lower earners, which is called '' progressivity''. In 2016, the OECD ranked Irish personal taxation as the 2nd most ''
progressive tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...
'' system in the OECD, with the top 10% of earners paying 60% of taxes. The 2018 OCED ''Taxing Wages'' study showed Irish average single and average married wage-earners paid some of the lowest ''effective'' employment tax rates in the OECD, with Irish average married wage-earners paying an employee tax rate of 1.2%. In 2018, the Irish
Revenue Commissioners The Revenue Commissioners ( ga, Na Coimisinéirí Ioncaim), commonly called Revenue, is the Irish Government agency responsible for customs, excise, taxation and related matters. Though Revenue can trace itself back to predecessors (with the A ...
disclosed that 80% of 2017 Irish corporate tax was paid by foreign multinationals, and the top 10 multinationals paid 40% of Irish Corporation tax in 2017. Ireland's Corporate tax system is controversial and has drawn labels of ''
Ireland as a tax haven Republic of Ireland, Ireland has been labelled as a tax haven or corporate tax haven in multiple financial reports, an allegation which the state has rejected in response. Ireland is on all academic "Tax haven#Tax haven lists, tax haven lists" ...
''. In June 2017, Ireland's CT system was ranked as one of the world's largest Conduit OFCs (i.e. places that act as links to tax havens), in March 2018 the
Financial Stability Forum The Financial Stability Forum (FSF) was a group consisting of major national financial authorities such as finance ministries, central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and ...
ranked Ireland as the 3rd largest Shadow Banking OFC, and in June 2018 tax academics calculated that Ireland was the world's largest
corporate tax haven Corporate haven, corporate tax haven, or multinational tax haven is used to describe a jurisdiction that multinational corporations find attractive for establishing subsidiaries or Incorporation (business), incorporation of regional or main compan ...
. Ireland's Property taxes (Stamp duty and LPT) are in line with the EU and OECD averages, but unlike Irish Income taxes, are not overtly progressive.


Structure of Irish tax revenues


Distribution of Exchequer Tax Revenues

Each year, the Department of Finance is required to produce a report on ''Estimates for Receipts and Expenditure'' for the coming year. The table below, is extracted from the "Tax Revenues" section of the report for the prior-year (e.g. the 2017 column is from the 2018 report), by which time the "Tax Revenues" for that year are largely known (although still subject to further revision in later years). The "Tax Revenues" quoted are ''Exchequer Tax Revenues'', and do not include ''Appropriations-in-Aid'' ("A–in–A") items, the largest being Social Security (or PRSI) which for 2015 was €10.2 billion, and other smaller items. Irish Personal Income tax, and the two main Irish consumption taxes of VAT and Excise, have consistently been circa 80% of the total Irish Exchequer Tax Revenue, with the balance being Corporate tax.


International comparisons

Comparisons of Ireland's tax system and international tax systems are complicated by two issues: * Distortion of Ireland's GDP. Ireland's GDP is artificially inflated by the
BEPS Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinational companies, multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is ...
flows of Ireland's '' Multinational tax schemes''. In 2018,
Eurostat Eurostat ('European Statistical Office'; DG ESTAT) is a Directorate-General of the European Commission The European Commission (EC) is the Executive (government), executive of the European Union (EU). It operates as a cabinet government, ...
found 25% of Ireland's 2010-14 GDP was BEPS flows (no taxable impact). In Q1 2015, Apple restructured its Irish BEPS tools, which required Irish 2015 GDP to be restated by 34.4%. In February 2017, the
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Republic of Ireland, Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categori ...
replaced Irish GDP with a new metric, GNI*, to remove the distortion; 2017 GDP was 162% of 2017 GNI* (EU–28 2017 GDP was 100% of GNI). * Effect of deductions and provisions. While Ireland's ''headline'' rates of taxation can be compared internationally, the effect of various tax deductions and provisions can materially change the net ''effective'' rate of taxation in a given area. The most dramatic, and controversial example of this is the difference between Ireland's ''headline'' corporate tax rate of 12.5%, and its ''effective'' corporate tax rate of under 4% (see below). However, this issue also appears in VAT and in the effect of child benefit transfers on ''tax wedge'' estimates of the net tax on take-home pay. Key sources for comparison are the OECD ''Tax Database'' and the OECD ''Ireland Tax Bulletins''. The Department of Finance has a ''Tax Policy Group'' which up until 2014, published documents that compared Ireland's taxation system internationally, including the main tax policy differences with other OECD countries.


Total Gross ''Tax-to-GDP'' ratio

From 2000 to 2014, Ireland's Total ''Gross Tax-to-GDP'' ratio was 27–30%, versus the OECD average of 33%, and EU–27 average of 36%. In October 2013, the Department of Finance ''Tax Policy Group'', highlighted the distortion of Irish GDP impacted this metric, and Ireland's ''Tax-to-GNP'' ratio at 36% was above the OECD average, and in line with the EU–27 average. However, since Apple's 2015 restructuring, Ireland's headline ''Tax-to-GDP'' ratio had fallen to the bottom of the OECD range at under 23%. Using 2017 GNI* (Irish 2017 GDP is 162% of Irish 2017 GNI*), Ireland ''Tax-to-GNI*'' ratio is back to 33%, in line with the OECD average. In 2017, Eurostat noted that Irish GNI* still contained BEPS tool distortions, and thus the Irish ''Tax-to-GNI*'' ratio is ''understated''.


Income tax (PAYE and PRSI)

The OECD's 2018 ''Taxing Wages'' shows Ireland's
tax wedge The tax wedge is the deviation from the equilibrium price and quantity (P^* and Q^*, respectively) as a result of the taxation of a good. Because of the tax, consumers pay more for the good (P_c) than they did before the tax, and Vendor (supply cha ...
for labour income, which is the total tax (PAYE and EE and ER–PRSI less SS Benefits) paid on Irish wages by both the employee and employer, as a % of the total cost of labour to the employer (PAYE and ER–PRSI), is one of the lowest in the OECD. Of the 35 OECD members in 2017, the average Irish single-worker cost 27.2% in taxes versus the OECD average of 35.9% (ranked 29th–lowest), and the average Irish married worker cost 10.8% in taxes versus the OECD average of 26.1% (ranked 31st–lowest). The OECD's 2018 ''Taxing Wages'' shows Ireland's employee tax on wages, which is the total tax (PAYE and EE–PRSI less SS Benefits) paid by Irish employees, as a % of their gross wages, is also one of the lowest in the OECD. Of the 35 OECD members in 2017, the average Irish single-worker paid 19.4% versus the OECD average of 25.5% (ranked 28th–lowest), and the average Irish married worker paid 1.2% versus the OECD average of 14.0% (ranked 33rd–lowest). In relation to the single-worker, the OECD noted that a driver of the lower Irish rate is that EE–PRSI (or employee social security contributions) are lower in Ireland versus the OECD average. PAYE and ER–PRSI accounted for 87% of the Irish tax wedge for labour income, whereas for the OECD average it was 77%. In relation to the married-worker, the OECD noted the additional effect of Irish child benefit and provisions which reduced the married-worker employee tax by 16.4%, whereas for the OECD average it was 9.8%. Ireland's lower EE–PRSI, and higher child benefits, have been noted in other studies. Aside from lower employee social security levies (e.g. EE–PRSI), the most distinctive aspect of Ireland's personal tax system is the level of '' Progressivity'', as defined by the ratio of the employee tax (or tax wedge for income) at 167% of the average wage, to employee tax at 67% of the average wage. In October 2013, the Department of Finance ''Tax Policy Group'', highlighted that Ireland has the most progressive personal tax system in the OECD. By September 2016, the ''Irish Tax Institute'' showed that Ireland was the 2nd most progressive personal tax system in the OECD. The progressive nature of Ireland's personal tax system is also apparent in the distribution of Irish personal tax. In October 2013, the Department of Finance ''Tax Policy Group'', highlighted the following personal tax (PAYE and EE–PRSI), statistics from the Irish Revenue Commissioners for the 2012 tax year: * Top 1% of earners, earned over €200,000 in income and paid 20% of personal tax. * Top 5% of earners, earned over €100,000 in income and paid 40% of personal tax. * Top 23% of earners, earned earn over €50,000 in income and paid 77% of personal tax. * Bottom 77% of earners, earned less than €50,000 in income and paid 23% of personal tax. The above format of the ''Tax Policy Group'' has never been reproduced, in April 2018, the OECD and the Irish Revenue Commissioners disclosed that in 2015: * Top 1% of earners, earned over €203,389 in income and paid 19% of personal tax. * Top 10% of earners, earned over €77,530 in income and paid 61% of personal tax.


Consumption tax (VAT and Excise)

Irish ''headline'' VAT is in line with EU VAT rates (see graphic). The OCED ''Revenue Statistics 2017 – Ireland'', ranks Ireland as being below the OECD average for ''effective'' VAT (22nd–lowest out of 35 OECD countries), but in line with the OECD average for overall Consumption taxes (e.g. VAT and Excise combined), ranking 16th of out 35 OECD countries. In October 2013, the Department of Finance ''Tax Policy Group'', highlighted that the distortion of Irish GDP impacted this metric and that Ireland's ''Consumption Tax as % of GNP'' ratio at 12%, and ''VAT as % of GNP'' ration at 8%, was at the EU–27 average for both metrics.


Corporate tax (CT)

Ireland's taxation system is distinctive for its low ''headline'' rate of corporation tax at 12.5% (for trading income), which is half the OECD average of 24.9%. While Ireland's corporate tax is only 16% of Total Net Revenues (see above), Ireland's corporate tax system is a central part of Ireland's economic model. Not only do foreign multinationals pay 80% of Ireland's corporation tax, but they also directly employ 10% of the Irish labour force, rising to 23% when Public Sector, agri and finance jobs are excluded and pay 50% of all Irish salary taxes using the same metric; in 2016, they were 57% of all Irish non-farm OECD value-add (see '' multinational economy''). A source of controversy is the ''effective'' tax rate of Ireland corporation tax system, of which the independent evidence is that it is less than 4%, and as low as 0.005% for major U.S. multinationals (see '' Irish effective corporate tax rate''). Ireland's Corporate Tax System has seen Ireland '' labelled a tax haven'', and in June 2018, academics estimated that Ireland was the largest '' global tax haven''. Ireland's reputation as a tax haven for foreign multinationals to avoid global taxes contrasts with that fact that Ireland's overall tax receipts are in line with the EU and OECD averages (when properly adjusted using Irish GNI*, and not the distorted Irish GDP).


Taxes on income (PAYE and PRSI)


Income tax

Income tax is charged in respect of all property, profits, or gains. Since 2002, Ireland has operated a
tax year A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal person, legal entity) by a governmental organization in order to fund government spending and various public expenditures (regiona ...
coinciding with the
calendar year Generally speaking, a calendar year begins on the New Year's Day of the given calendar system and ends on New Year's Eve, the day before the following New Year's Day, and thus consists of a natural number, whole number of days. A year can also be ...
(1 January to 31 December).Finance.gov.ie
/ref> The change coincided with the introduction of the
euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, code: EUR) is the official currency of 19 out of the Member state of the European Union, member states of the European Union (EU). This group of states is known as the eurozone o ...
in Ireland. For administrative purposes, taxable income is expressed under four schedules: *Schedule C: public revenue dividends (i.e. coupon payments on
government debt A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit o ...
) *Schedule D **Case I: Profit arising from any trade, or from quarries, mines, works, tolls, fairs, bridges, and railways **Case II: Profit arising from any profession not contained in any other schedule **Case III: Interest on money or debts, annuities, discounts, profits on government debt not covered in schedule C, interest on certain government debt, income on securities outside the state not covered in schedule C, and income from possessions outside the state **Case IV: Tax in respect of any annual profits or gains not covered by any other case or schedule. There are also specific types of income specified by law to be taxed under case IV. **Case V: Tax in respect of
rent Rent may refer to: Economics *Renting Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property Property is a system of rights that gives people legal contro ...
or receipts from any
easement An easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it. It is "best typified in the right of way which one landowner, A, may enjoy over the land of another, B". An easement is a propert ...
*Schedule E: Income from public offices, employment, annuities, and pensions. *Schedule F: Dividends from Irish companies.


Rates of income tax

Since 1 January 2015, the tax rates apply as follows: There are 2 tax brackets, 20% (the ''standard rate'') and the balance of income at 40% (the ''higher rate''). The brackets depend upon the individual's category. The €43,550 amount may, for married couples, be increased by the lesser of: €25,550 or the income of the second spouse. This brings the total maximum standard rate band for a married couple to €69,100,Revenue.ie
/ref> twice the single person's band. The increase is not transferable between spouses. Irish income tax brackets (2019) The €44,300 amount may, for married couples, be increased by the lesser of: €26,300 or the income of the second spouse. This brings the total maximum standard rate band for a married couple to €70,600, little less than twice the single person's band. The increase is not transferable between spouses.


Tax credits

A taxpayer's tax liability is reduced by the amount of their tax credits, which replaced tax-free allowances in 2001.
/ref> Tax credits are not refundable in the event that they exceed the amount of tax due, but may be carried forward within a year. A wide range of tax credits are available. A few are awarded automatically, while others must be claimed by taxpayers. The principal tax credit is the personal tax credit, which is currently €1,650 per year for a single person and €3,300 per year for a married couple. A widowed person in the year of bereavement, or for as long as they have dependent children, may claim the €3,300 credit as well; a higher credit is available to widowed parents during the five tax years following the bereavement. The PAYE tax credit, which is also €1,650, is awarded to employees and others who pay tax under the
Pay as you earn A pay-as-you-earn tax (PAYE), or pay-as-you-go (PAYG) in Australia, is a withholding tax, withholding of taxes on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent th ...
system (further details below), to compensate them for the
time value of money The time value of money is the widely accepted conjecture that there is greater benefit to receiving a sum of money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, ...
effect; their tax is deducted from their incomes during the year, whereas the self-employed pay near the end of the year. The credit may not exceed 20% of the recipient's income during the year and it is not transferable between spouses.


Rules of residence

A person resident and domiciled in Ireland is liable to Irish income tax on their total income from all sources worldwide. In this sense, a person who spends: * 183 days or more in Ireland during a tax year, or * an aggregate of 280 days in the current and preceding tax year is considered to be resident.Section 819, TCA 1997 Presence in Ireland of not more than 30 days in a tax year is ignored for the purposes of the two year test. Since 1 January 2009, a person is treated as present in Ireland for a day if present at any time during the day; before this, a person was only treated as present if he or she was present at midnight, a rule which was nicknamed the "
Cinderella "Cinderella",; french: link=no, Cendrillon; german: link=no, Aschenputtel) or "The Little Glass Slipper", is a Folklore, folk tale with thousands of variants throughout the world.Dundes, Alan. Cinderella, a Casebook. Madison, Wis: University of ...
clause". A person may also elect to be resident in Ireland in a year in which he arrives in Ireland, once he can satisfy Revenue that he intends to remain there for the next tax year. A person who is resident in Ireland for three consecutive years becomes ordinarily resident, and ceases to be ordinarily resident after he has been non-resident in Ireland for three consecutive years.Section 820, TCA 1997 A person is domiciled in Ireland if born in Ireland; a person who has "demonstrated a positive intention of permanent residence in new country" ceases to be domiciled in Ireland. A person who is not an Irish resident but is ordinarily resident in Ireland is liable to tax on all Irish and foreign-sourced income in full, except for income from a trade, profession, office, or employment, the duties of which are entirely exercised outside Ireland, and on foreign income under €3,810 per year.Revenue.ie
/ref> A person who is resident in Ireland, and is either ordinarily resident or domiciled in Ireland, but not both, is liable to tax on all Irish income in full, and on such foreign income as is remitted to Ireland. A person who is neither resident, ordinarily resident, nor domiciled in Ireland is taxable on all Irish sourced income in full, and on foreign sourced income in respect of a trade, profession, or employment exercised in Ireland.


Exemption limits and marginal relief

A person aged 65 or over during the tax year is exempt from income tax if his or her income is under €18,000 per year. A married couple with income under €36,000 per year is also exempt if either spouse is aged 65 or over or reaches 65 during the year; the exemption amount is increased by €575 for each of the couple's first two dependent children and by €830 for each subsequent child.
/ref> A person or couple earning slightly over the limit may claim what is known as marginal relief. In this case, income over the exemption limit is charged to tax at a flat rate of 40%. A person or couple may choose to be taxed under marginal relief or the regular tax system, and will be granted whichever system is more beneficial, including retroactively.


Deductions from tax liabilities

Some items of expenditure can be deducted from a person's income for tax purposes, generally referred to as getting tax relief. In some cases the tax must be claimed retrospectively; in others it is processed as an increase to tax credits. The vast majority are only allowed at the standard tax rate of 20%.


=Medical insurance

= A person purchasing private medical insurance is entitled to tax relief at 20%, which is usually given at source – the person pays 80% of the cost, and the government pays the rest directly to the insurance company. Persons aged over 50 are entitled to a further tax credit, which is normally paid in full to the insurance company to offset the considerably higher cost incurred by insurers in respect of members over 50.


=Medical expenses

= Tax relief is available on medical expenses.Revenue Leaflet IT6

/ref> With the exception of fees paid to approved nursing homes, the relief is only available retrospectively (i.e. by completing a
tax return A tax return is the completion of documentation that calculates an entity or individual's income earned and the amount of taxes to be paid to the government or government organizations or, potentially, back to the taxpayer. Taxation is one of ...
at the end of the year), and the relief is awarded at 20% since 2009. It can be claimed for a person's own expenses, or expenses which they pay on behalf of a relative, dependant, or, since 2007, anyone at all. Medical expenses are construed widely, and include: *Fees of doctors and consultants *Prescription medicines (to a maximum of €144 per month, above which the
Health Service Executive The Health Service Executive (HSE) ( ga, Feidhmeannacht na Seirbhíse Sláinte) is the publicly funded healthcare system in Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, Nor ...
will repay the entire balance) *Hospital costs *Ambulance fees *Non-routine dental treatments *Nursing home expenses *Special food for diabetics and coeliacs *Overnight accommodation for a parent near a hospital where his or her child is being treated *Travel expenses for dialysis patients or for the transport of children to and from hospital for children with life-threatening illnesses or permanent disabilities The relief can be claimed in the year when the cost was incurred or in the year when the payment was made.


=Permanent health insurance

= A person may deduct from his income for the purposes of tax calculation up to 10% of that income which is spent on permanent health insurance. Relief is therefore given at 40% if the person is paying the higher rate of tax. If the payment is made by salary deduction the payment is treated as a benefit in kind (BIK) and as such is subject to the Universal Social Charge (USC) and PRSI.


=Service charges

= Tax relief is allowed on service charges paid to a local council for domestic sewage disposal, as well as all payments for domestic water supply or domestic refuse collection or disposal. The relief is allowed in arrears – credit for payments made in 2007 is given in 2008 – and is given at 20%, to a maximum of €80 (where €400 or more was paid for service charges). It will cease from 2011.


=Tuition fees

= Tax relief at 20% is allowed in respect of tuition fees paid for third-level courses, excluding the first €2,500 for a full-time course and €1,250 for a part-time course, of the course fees). The maximum relief available is €1,400 per year (20% of €7,000). Courses must be of at least two years duration, except for postgraduate courses which must be of at least one-year duration. The course must also be approved by Revenue and delivered in a college approved by Revenue.Revenue.ie
/ref> As with medical expenses, since 2007 the relief could be claimed in respect of payments made by any person, irrespective of the relationship between payer and payee. It cannot be claimed in respect of administration, registration, or examination fees. Relief is also allowed in respect of fees of over €315 for foreign-language or information technology courses approved by FÁS, of less than two years duration, which results in the award of a certificate of competence. The relief is for 20% of the amount paid, to a maximum of €254 (20% of €1,270) per course. It is not available for courses in the Irish or English languages.Revenue.ie
/ref>


=Pension contributions

= Contributions to a
pension scheme A pension (, from Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) aroun ...
can be deducted from gross income before calculation of tax; tax relief is therefore allowed on them at 40% if the contributor is paying tax at that rate. Contributions (including AVCs) are subject to the Universal Service Charge currently at 7%.


How tax is paid

Taxpayers pay either on a "pay as you earn" system or a "pay and file" system.


=The 'Pay As You Earn' (PAYE) system

= Employees, pensioners, and directors generally have tax deducted from their income by their employers as it is paid. Under this system, tax is calculated by the employer on each pay day, withheld, and paid over to Revenue.Revenue.ie
/ref> Employers receive notification of the tax credit and standard rate band applicable to the employee from Revenue. A PAYE employee need only file a tax return on form 12Revenue.ie
/ref> if requested to do so by an inspector of taxes, if she has other undeclared income, or if she wishes to claim reliefs which are not available on another form.


=Self-assessment

= The self-assessment system applies to persons who are self-employed or who receive non-PAYE income. Under the self-assessment system, a taxpayer must: *pay preliminary tax for the current tax year, *pay any balance of tax due for the last tax year, and *file a return of income on form 11 for the last tax year by the deadline each year.
/ref> The deadline is 31 October for paper filings. It has historically been extended to mid-November for returns filed online, but it is not clear whether this will continue. Preliminary tax must be at least equal to the least of: *90% of tax for the current tax year *100% of tax for the previous tax year *105% of tax for the pre-preceding tax year (for payments by monthly direct debit) Revenue will calculate the tax payable for a person who files a return of income more than two months prior to the filing deadline. Underpaid tax attracts an interest penalty charge of 0.0219% per day, and underpayments may result in a surcharge, prosecution, or publication of their name in a defaulters' list.


Universal Social Charge (USC)

The Universal Social Charge (USC) is a tax on income that replaced both the income levy and the health levy (also known as the health contribution) since 1 January 2011. It is charged on a person's ''gross income'' before any pension contributions or PRSI. If a person's income is less than €13,000 they pay no Universal Social Charge (USC). (This limit was €4,004 in 2011, €10,036 from 2012 to 2014 and €12,012 in 2015.) Once income is over this limit, a person pays the relevant rate of USC on all income. For example, a person with income of €13,000 will pay no USC. A person with income of €13,001 will pay 0.5% on income up to €12,012 and 2.5% on income between €12,012 and €13,001. Aggregate income for USC purposes does not include payments from the
Department of Social Protection The Department of Social Protection ( ga, An Roinn Cosanta Sóisialta) is a department of the Government of Ireland The Government of Ireland ( ga, Rialtas na hÉireann) is the cabinet (government), cabinet that exercises executive (governmen ...
.


Standard Rates of USC (2018)


Reduced Rates of USC (2018)

Reduced rates of USC apply to: * People aged 70 or over whose aggregate income for the year is €60,000 or less * Medical card holders aged under 70 whose aggregate income for the year is €60,000 or less


Pay Related Social Insurance (PRSI)

PRSI is paid by employees, employers, and the self-employed as a percentage of wages after pension contributions.Welfare.ie
/ref> It includes social insurance and a health contribution. Social insurance payments are used to help pay for
social welfare Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...
payments and pensions. Each week's payment earns the employee a "credit" or "contribution", which credits are used to establish entitlements to non-means-tested welfare payments such as Jobseeker's Benefit and the
State Pension A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...
(contributory). The health contribution is used to help fund the health services, although paying it does not confer any entitlement to treatment or anything else. For the most part, the two amounts are combined and stated as one deduction on payslips. There was a ceiling of €75,036 per year on the employee social insurance element of the payment but this ceiling was abolished from 2011 onwards.


Class A

Class A workers are employees aged under 66 in industrial, commercial, and service-type employment who are paid more than €38 a week from all employments, as well as to public servants recruited from 6 April 1995.Welfare.ie
/ref> Class A employees earning under €352 per week are placed in subclass AO, and pay no PRSI/ Class A employees earning between €352 and €356 are in subclass AX; those earning over €356 but less than or equal to €500 are in subclass AL. Both subclasses pay 4% PRSI, and the first €127 of earnings are no longer disregarded for this calculation, so therefore PRSI is 4% on all earnings/ Class A employees earning over €500 per week are in subclass A1 and pay 4% on all their weekly earnings. Employers of employees in the above classes pay 8.5% PRSI for employees earning under €356 per week and 10.75% PRSI for employees earning over that amount. The applicable rate applies on the entire wage, with no ceiling. Classes A4, A5, A6, A7, A8, and A9 relate to community employment schemes and employer's PRSI exemption schemes. Class A8 is for income under €352 per week and has no employee PRSI liability; class A9 is for income over that amount and is liable at a flat rate of 4%. Both classes have an employer's PRSI rate of 0.5%.


Classes B, C, and D

Class B workers are permanent and pensionable civil servants recruited before 6 April 1995, doctors and dentists employed in the civil service, and gardaí recruited before 6 April 1995. Class B workers earning under €352 per week are placed in subclass BO, and pay no PRSI. Class B workers earning between €352 and €500 per week are placed in subclass BX, and class B workers earning over €500 per week but exempt from the health contribution are placed in subclass B2. Both these subclasses pay 0.9% PRSI on all earnings except the first €26 per week. Class B workers earning over €500 per week and not exempt from the health contribution are placed in subclass B1. They pay 4% PRSI on the first €26 of their weekly earnings, 4.9% on the next €1,417, and 5.9% on the balance. Class C workers are commissioned officers of the defence forces, and members of the army nursing service, recruited before 6 April 1995. Class D workers are all permanent and pensionable employees in the public service not caught in classes B or C, recruited before 6 April 1995. Workers in classes C and D pay PRSI at the same rates as class B. Employers of class B employees pay a flat rate of 2.01% PRSI on all their employees' earnings; for class C, the rate is 1.85%, and for class D it is 2.35%, although this is effectively a transfer of money from one government account to another.


Class H

Class H workers are
non-commissioned officer A non-commissioned officer (NCO) is a military officer who has not pursued a Commission (document), commission. Non-commissioned officers usually earn their position of authority by promotion through the enlisted ranks. (Non-officers, which inc ...
s and
enlisted personnel An enlisted rank (also known as an enlisted grade or enlisted rate) is, in some armed services, any Military_rank, rank below that of a Officer (armed forces), commissioned officer. The term can be inclusive of non-commissioned officers or warra ...
of the Defence Forces. Class H workers earning under €352 per week are placed in subclass HO, and pay no PRSI. Class H workers earning from €352 to €500 per week are placed in subclass HX. Class H workers earning over €500 and exempt from the health contribution are placed in subclass H2. Workers in each of these classes pay 3.9% PRSI on their earnings except for the first €127 per week. Other class H workers are placed in subclass H1. They pay 4% PRSI on the first €127 of their weekly earnings, 7.9% on the next €1,316, and 8.9% on the balance. Employers of class H workers pay 10.05% PRSI on all their employees' earnings.


Class J

Class J workers are employees aged 66 or over, those earning under €38 per week, or those in subsidiary employment. They pay only the health contribution of 4% if their earnings exceed €500 per week, or 5% on the amount that exceeds €1,443 per week. The employer's contribution is 0.5%. Subsidiary employment includes the employment of a person subject to class B, C, D, or H in his main employment.


Classes K and M

Classes K and M apply to income which is subject to the health contribution but not to social insurance, including occupational pensions. It also applies to judges, state solicitors, and income of self-employed persons aged 66 or over. Class K income is subject to the health contribution of 4% if earnings exceed €500 per week, or 5% on the amount that exceeds €1,443 per week. There is no employer contribution. Class M relates to persons under 16, who are exempt from PRSI entirely, and to income which would fall under class K paid to persons exempt from the health contribution. It has a zero rate.


Class S

Self-employed Self-employment is the state of working for oneself rather than an employer. Tax authorities will generally view a person as self-employed if the person chooses to be recognised as such or if the person is generating income for which a tax return ...
people, including certain
company director A board of directors (commonly referred simply as the board) is an executive committee A committee or commission is a body of one or more persons subordinate to a deliberative assembly. A committee is not itself considered to be a form of ...
s, pay class S PRSI; the class also applies to certain investment and rental income. Where income is less than €500 per week, subclass S0 applies. Where income is above €500 per week, subclass S1 applies, except to persons exempt from the health contribution, to whom subclass S2 applies. The rate for subclasses S0 and S2 is 3%, and the rate for subclass S1 is 7% up to €1,443 per week and 8% on that portion of income above that amount.


Health contribution

The health contribution was replaced by the USC from 2011 onwards


How PRSI is paid

Taxpayers paying class S PRSI pay it, and the health contribution, along with their tax. For other taxpayers, it is withheld from their net income.


Taxes on Consumption (VAT and Excise)


Value added tax (VAT)

Value-Added Tax A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end ...
(VAT) is a transaction tax on Irish consumer spending, and almost all goods and services supplied in Ireland are subject to VAT.Irish Revenue.ie: Value-Added Tax (VAT)
/ref> Goods imported into Ireland from outside the EU are also subject to VAT, which is charged by Customs at the border.Irish Revenue.ie: What is VAT?
/ref> Irish VAT is part of the European Union Value Added Tax system and each Member State is required to impose the EU VAT legislation by way of its own domestic legislation, however, there are key differences between the rules for each state. All non-exempt traders are required to register for VAT and collect VAT on the goods and services they supply. Each trader in the ''chain of supply'', from manufacturer to retailer, charges VAT on their sales and incurs VAT on their raw materials; they pay the Irish Revenue their net VAT.


Registration thresholds

A trader whose turnover exceeds the registration thresholds, or is likely to exceed them in the next 12 months, must register for VAT.Revenue.ie
/ref> The registration thresholds are as follows: *The basic threshold is €75,000 (provided no more than 10% of turnover comes from services and none of the other conditions below are met). *The threshold for a person supplying services, making mail-order or distance sales into Ireland, or supplying goods liable at the VAT rates of 13.5% or 21% which he manufactures from zero-rated materials is €37,500. *The threshold for a person making intra-EU acquisitions is €41,000. *There is no threshold for a non-established person supplying taxable goods or services in Ireland, or for a person receiving so-called Fourth Schedule services (intangible, remotely provided services, like advertising, broadcasting, and telecommunications services) from abroad — any such person must register for VAT. A person below these limits may register voluntarily. It is often beneficial for persons who mainly trade with other businesses to register for VAT even when their turnover is below the relevant limits.


VAT rates

VAT rates range from 0% on books, children's clothing and educational services and items, to 23% on the majority of goods.Revenue.ie
/ref> The 13.5% rate applies to many labour-intensive services as well as to restaurant meals, hot takeaway food, and bakery products. A 4.8% rate applies to supply of livestock and greyhounds. A 5.4% "flat rate addition" applies to the agricultural sector, although this is not strictly VAT – it is charged by farmers not registered for VAT to compensate them for VAT which they must pay to their suppliers.
/ref> The flat rate addition is not paid away to the Revenue. Traders collecting VAT can deduct the VAT incurred on their purchases from their VAT liability, and where the VAT paid exceeds VAT received, can claim a refund. The VAT period is normally two calendar months (other filing periodicity, such as four-monthly, and semi-annual also apply in certain circumstances). A VAT return is made on the 19th day of the following the end of the period. However, if a persons submits the return on the website, i.e. ROS ("Revenue Online Service"), and also performs payment via ROS, then the due date is extended to the 23rd day following the end of the period. Once a year a detailed breakdown of VAT returns must be prepared by traders and submitted to the government – traders may choose their own date for this. Traders with low VAT liabilities may opt for six-monthly or four-monthly payments instead of the standard bi-monthly one, and traders who are generally in the position of claiming repayments of VAT rather than making payments may make monthly returns.


Excise Duty

Excise tax file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...
is charged on
mineral oil Mineral oil is any of various colorless, odorless, light mixtures of higher alkanes from a mineral source, particularly a distillate of petroleum, as distinct from usually edible vegetable oils. The name 'mineral oil' by itself is imprecise, ...
, tobacco, and alcohol. * Mineral oil includes hydrocarbon oil,
liquefied petroleum gas Liquefied petroleum gas (LPG or LP gas) is a fuel gas which contains a flammable mixture of hydrocarbon gases, specifically propane, propylene, butylene, isobutane and n-butane. LPG is used as a fuel gas in HVAC, heating appliances, cookin ...
, substitute fuel, and additives.Section 94, FA 1999 Hydrocarbon oil includes petroleum oil, oil produced from coal,
bituminous Asphalt, also known as bitumen (, ), is a sticky, black, highly viscosity, viscous liquid or semi-solid form of petroleum. It may be found in natural deposits or may be a refined product, and is classed as a Pitch (resin), pitch. Before the ...
substances, and liquid
hydrocarbon In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and Hydrophobe, hydrophobic, and their odors are usuall ...
s, but not substances that are solid or semi-solid at 15 °C In addition to the tax, a carbon charge is applicable to petrol,
aviation gasoline Avgas (aviation gasoline, also known as aviation spirit in the United Kingdom, UK) is an aviation fuel used in aircraft with spark-ignited internal combustion engines. ''Avgas'' is distinguished from conventional gasoline (petrol) used in moto ...
, and heavy oil used as a propellant, for air navigation, or for private pleasure navigation, and this was scheduled to be extended in May 2010 to apply to other uses of heavy oil and liquefied petroleum gas, and to natural gas. * Tobacco excise applies to tobacco products, including cigars, cigarettes,
cavendish Cavendish may refer to: People * The House of Cavendish, a British aristocratic family * Margaret Cavendish, Duchess of Newcastle-upon-Tyne, Margaret Cavendish (1623–1673), British poet, philosopher, and scientist * Cavendish (author) ( ...
, hard-pressed tobacco,
pipe tobacco A tobacco pipe, often called simply a pipe, is a device specifically made to smoke tobacco. It comprises a chamber (the bowl (smoking), bowl) for the tobacco from which a thin hollow stem (shank) emerges, ending in a mouthpiece. Pipes can rang ...
, and other smoking or
chewing tobacco Chewing tobacco is a type of smokeless tobacco, smokeless tobacco product that is placed between the cheek and lower Gums, gum to draw out its flavor. Some users chew it, others do not. It consists of coarsely chopped aged tobacco that is flavore ...
. The increased rate of tax will bring prices for cigerettes up by 50c per packet as outlined in the Irish Budget 2018. * Alcohol and alcoholic beverages duty applies to alcohol products produced in Ireland or imported into Ireland. As of 2016 tax over a bottle of
wine Wine is an alcoholic drink typically made from Fermentation in winemaking, fermented grapes. Yeast in winemaking, Yeast consumes the sugar in the grapes and converts it to ethanol and carbon dioxide, releasing heat in the process. Different ...
is over 50%.


Corporation tax (CT)

Irish corporation tax returns have historically been between 10% to 16% of total Irish net Tax Revenues, however, since 2015, corporation tax has risen sharply, doubling in scale from 4.6 billion in 2014 to 8.2 billion in 2017; the Revenue Commissioners state that foreign multinationals pay circa 80% of Irish corporation tax. , there are two rates of corporation tax ("CT") in the Republic of Ireland: *a 12.5% ''headline rate'' for trading income (or active businesses income in the Irish tax code); ''trading'' relates to a business enterprise; *a 25.0% ''headline rate'' for non-trading income (or passive income in the Irish tax code); covering investment income (e.g. income from buying and selling assets), rental income from real estate, net profits from foreign trades, and income from certain land dealings and income from oil, gas and mineral exploitations. The special 10% tax rate for manufacturing in Ireland (introduced from 1980/81), and for financial services in the special economic zone of the
International Financial Services Centre The International Financial Services Centre (IFSC) is an area of central Dublin and part of the Central business district, CBD established in the 1980s as an urban regeneration area and special economic zone (SEZ) on the derelict state-owned ...
in Dubin (introduced from 1987), have now been phased out since 2010 and 2003 respectively, and are no longer in operation. , Ireland's corporate tax system is a "worldwide tax" system, with no thin capitalisation rules, and a holding company regime for
tax inversions A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer A taxpayer is a person or organization (such as a company) subject to pay a tax. Modern taxpayers may have an Taxpayer Identification Number, identifi ...
to Ireland. Ireland has the most U.S. corporate tax inversions, and ''
Medtronic Medtronic plc is an American medical device company. The company's operational and executive headquarters are in Minneapolis, Minnesota, and its legal headquarters are in Ireland due to its acquisition of Irish-based Covidien in 2015. While it ...
'' (2015) was the largest U.S. tax inversion in history. Ireland's corporate tax system has
base erosion and profit shifting Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinational companies, multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is ...
(BEPS) tools, such as the ''
Double Irish The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest tax ...
'' (used by Google and Facebook), the '' Single Malt'' (used by Microsoft and Allergan), and the '' Capital Allowances for Intangible Assets'' (CAIA) (used by Accenture, and by Apple post Q1 2015); in June 2018, academics showed they are the largest global BEPS tools. In a phenomenon sometimes referred to as "
leprechaun economics Leprechaun economics was a term coined by economist Paul Krugman to describe the 26.3 per cent rise in Irish 2015 Gross domestic product, GDP, later revised to 34.4 per cent, in a 12 July 2016 publication by the Central Statistics Office (Ire ...
", Apple's 2015 restructure of its BEPS tools inflated Irish GDP by 34.4%. Ireland's tax system also offers SPVs that can be used by foreign investors to avoid the 25% corporate tax on passive income from Irish assets, which are covered in more detail in ''
Irish Section 110 Special Purpose Vehicle (SPV) An Irish Section 110 special purpose vehicle (SPV) or section 110 company, is an Irish tax resident company, which qualifies under ''Section 110'' of the ''Corporation tax in the Republic of Ireland, Irish Taxes Consolidation Act 1997'' (TCA) ...
'', and in ''
Qualifying investor alternative investment fund (QIAIF) Qualifying Investor Alternative Investment Fund or QIAIF is a Central Bank of Ireland regulatory classification established in 2013 for Ireland's five tax-free legal structures for holding assets. The Irish Collective Asset-management Vehicl ...
''. The Irish QIAIF is a Central Bank of Ireland regulatory classification that includes the '' Irish Collective Asset-management Vehicle'' or ICAV, and the '' L-QIAIF''.


Capital gains tax (CGT)

Capital gains tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible ...
is payable where a person makes a gain on the sale of assets, called ''chargeable assets''.Revenue.ie
/ref> The standard CGT rate is 33% in respect of disposals made from midnight on 7 December 2013. The rate of tax for disposals made in previous years is less: details can be obtained from the Revenue Commissioners.


Persons affected

Any person (including a company) resident or ordinarily resident in Ireland is liable to CGT on all chargeable gains accruing on all disposals of chargeable assets. A person resident or ordinarily resident, but not domiciled, in Ireland is only liable to CGT on disposals of assets outside of Ireland where the gains are remitted to Ireland.Revenue.ie
/ref> A person neither resident nor ordinarily resident in Ireland is only liable to CGT on gains from: #Land and buildings in Ireland #Minerals or mining rights in Ireland #Exploration or exploitation rights in a designated area of the Irish Continental Shelf #Shares (not quoted on a stock exchange) deriving their value from any or all of items 1, 2, or 3 #Assets in Ireland used for the purpose of a business carried on in Ireland


Calculation

The gain or loss is calculated as the sale price less the purchase price. From the sale price can be deducted the cost of acquisition of the asset, including incidental costs such as conveyancing costs, the cost of the disposal, and costs of improving the asset. Where the asset was acquired prior to 6 April 1974, its value on that date is used instead of the purchase price. The purchase price, cost of acquisition, and costs of improvement can be adjusted for inflation from 6 April 1974 up to 31 December 2002, and a table is published by Revenue for the purpose of calculating this adjustment. The inflation adjustment can only operate to reduce a gain; it cannot increase a loss or turn a gain into a loss.


Offsetting

Capital losses can be offset against capital gains arising in the same or later tax year. Non-chargeable losses (see below) cannot be offset against chargeable gains. In each tax year losses carried forward must be used before exemptions are applied.


Exemptions and reliefs

*The first €1,270 of net gains by an individual each year are not chargeable. The exemption is not transferable between spouses and cannot be carried forward from year to year. *Certain assets are designated non-chargeable assets, including: **Government securities ** Savings certificates and savings bonds **Land bonds **Securities issued by certain semi-state bodies *Certain gains/losses are not chargeable, including: ** National Instalment Savings bonuses and Prize Bond prizes **Gains from
life assurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurance , insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon ...
policies or deferred annuity contracts, except those purchased from another person or taken out after May 1993 with certain foreign insurers **Gains on the disposal of wasting chattels, for example animals and motor cars **Gains on the disposal of tangible non-wasting movable property worth €2,540 or less on disposal (the disposal of a set of articles to one person or to connected persons is considered a single disposal) **Gains accruing to local authorities, and some gains accruing to pension funds, trade unions, and charities **Gains from betting, lotteries, and sweepstakes *Gains from the sale by an individual of his/her principal private residence (including up to 0.4 hectares of land) are not chargeable. If only part of the premises is a principal private residence, the relief is allowed on a proportionate basis. This relief does not apply where land is sold as development land. *The transfer by a parent to his/her child of a site where the child will construct a principal private residence is exempt from CGT as long as the child lives there for at least three years. *The sale by a person aged over 55 of a business or farm for under €0.5m, or to a family member, is exempt. Transfers between spouses do not give rise to a charge for capital gains tax; the acquiring spouse is considered to have acquired the property on the same date and at the same price as the disposing spouse.


Payment

CGT is a self-assessment tax for all taxpayers. Tax on gains realised in the first eleven months of the year is payable by 15 December that year, and tax on gains realised in December payable by 31 January the next year. A return must be made by 31 October in the following year with full details of the gain.Revenue.ie
/ref> A person purchasing a chargeable asset for over €500,000 must withhold 15% of the price and pay it to Revenue unless the Revenue has issued a CG50A certificate to the vendor prior to the purchase.Revenue.ie
/ref> The certificate CG50A is issued by the Revenue on application, provided that either the vendor is resident in Ireland, no CGT is payable on the disposal, or the CGT has already been paid.


Deposit interest retention tax

Deposit Interest Retention Tax (abbreviated as DIRT), is a retention tax charged on
interest In finance and economics, interest is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is ...
earned on bank accounts, as well as some other investments. It was first introduced in Ireland in the 1980s to reduce tax evasion on unearned income. DIRT is deducted at source by financial institutionsRevenue.ie
/ref> From 1 January 2014, DIRT is charged at 41% (was 33% in 2013) for payments made annually or more frequently. The tax is deducted by the bank or other deposit-taker before the interest is paid. DIRT will be charged at 36% (in 2013, lower rates in previous years) for payments made less frequently. This higher D.I.R.T. rate has been abolished, as and from the 1st January 2014, and the D.I.R.T. rate of 41% applies to any interest paid or credited on these deposits on or after the 1st January 2014. Persons aged over 65 or incapacitated, whose income is less than the exemption limit (currently €20,000), may claim a refund of DIRT, or may submit an appropriate form to their banks or financial institutions to have interest paid free of DIRT. DIRT does not apply to: *Interest on deposits where the beneficial owner is a non-resident *Deposits of companies which are chargeable to corporation tax *Deposits of Revenue-approved pension schemes *Deposits belonging to charities


Stamp duties

Stamp duty Stamp duty is a duty (tax), tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions). A phy ...
is charged on the conveyance of residential property, non-residential property, and long leases, and also on company share transfers, bank cheques and cards (i.e. ATM cards and credit cards), and insurance policies.


Conveyance of property

Stamp duty is charged as a percentage of the consideration paid for immovable property, including goodwill attached to a business. A stamp duty return must be completed online for all such conveyances; physical stamps are no longer attached to documents.


On residential property

First time buyers (i.e. those who have not purchased a house before in Ireland or in any other jurisdiction) are exempt. One may also qualify as a first-time buyer if newly divorced or separated. New owner-occupied houses or apartments with a floor area of less than 125 m2 may also be exempt, and new owner-occupied houses with a floor area larger than this are assessed based on the greater of the cost of the site or quarter of the total cost of the house and site. In all cases, the rates exclude VAT.Revenue.ie
/ref> For deeds executed on or after 8 December 2010 the rates of stamp duty are:. * the first €1,000,000: 1%, * excess over €1,000,000: 2%,


On non-residential property

Since 14 October 2008, conveyances of non-residential property are charged at an increasing rate starting at 0% for a property under the value of €10,000 rising to 6% for transactions over €80,000.


Exemptions and reliefs

Transfers between spouses are exempt from stamp duty, as are property transfers as a result of a court order in relation to a divorce.
/ref> The stamp duty rate is halved for transfers between other blood relatives. Intragroup transactions, company reconstructions and amalgamations, and demutualisations, as well as certain transactions involving charities, approved sports bodies, young farmers, woodlands, or intellectual property also attract relief.


Stocks and shares

There is a 1% stamp duty on transfers of stock or marketable securities of any company incorporated in Ireland, except paper-based transfers where the consideration is €1,000 or less.


Bank cards and cheques

Credit card and
charge card A charge card is a type of credit card that enables the cardholder to make purchases which are paid for by the card issuer, to whom the cardholder becomes indebted. The cardholder is obligated to repay the debt to the card issuer in full by the ...
accounts are subject to a €30 annual duty.
Automated teller machine An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fund ...
and
debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term ''#Plastic card, plastic card'' includes the above and as an identity document. These are similar to a credi ...
s are subject to €2.50 each annually. Cards which perform both functions are subject to the tax twice, i.e. €5 total. Cards that are unused in the entire year are not chargeable. The credit card tax is applied per account, but the ATM and debit card charge is per card. In each case, where an account is closed during the year, there is an exemption from
double taxation Double taxation is the levying of tax by two or more jurisdictions on the same income (in the case of income taxes), asset (in the case of Wealth tax, capital taxes), or financial transaction (in the case of sales taxes). Double liability may be m ...
.
Cheques A cheque, or check (American English; American and British English spelling differences, see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person ...
(technically, all
bills of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
) incur a €0.50 tax, generally collected by the bank on issue of each chequebook. Non-life Insurance policies are subject to a 3% levy and
Life assurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurance , insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon ...
policies are subject to a 1% levy on premiums from 1 June 2009.


Capital acquisitions tax (CAT)

Capital acquisitions tax is charged to the recipient of gifts or inheritances, at the rate of 33% above a tax-free threshold.Revenue.ie
/ref> Gifts and inheritances are gratuitous benefits; the difference is that an inheritance is taken on death and a gift is taken other than on death. The person providing the property is called the ''donor'' or ''disponer'', or ''testator'' or ''deceased'' in the case of inheritance; the person receiving the property is called the ''beneficiary'', ''donee'' or ''disponee'', or the ''successor'' in the case of inheritance. A gift is taken when a donee becomes beneficially entitled in possession to some property without paying full consideration for it.
/ref> Tax is payable within four months of the date of the gift; an interest charge applies to late payments. Tax is generally charged on the property's taxable value, which is computed as: Market value ''less'' liabilities costs and expenses payable out of the gift or inheritance = incumbrance free value ''less'' consideration paid by acquirer in money or money's worth = taxable value


Taxable transfers

A disposition is taxable in Ireland if it is of property in Ireland, or if either the disponer or the beneficiary was resident or ordinarily resident in Ireland at the date of the disposition. Special rules apply for discretionary trusts.


Exemptions and reliefs

CAT can be reduced or eliminated altogether under a number of headings.


Exemption thresholds

Historically group thresholds were indexed by reference to the Consumer Price Index. The indexation of the tax-free group thresholds is abolished for gifts and inheritances taken on or after 7 December 2011. The thresholds on or after 14 October 2015 are: * €280,000 (Group A) (was €225,000 on or after 06/12/2012) where the beneficiary's relationship to the disponer is: son or daughter, minor child of a predeceased son or daughter. Child includes a foster child (since 6 December 2000) and an adopted child (since 30 March 2001). * €30,150 (Group B), where the beneficiary's relationship to the disponer is: lineal ancestor (e.g. parent), lineal descendant (not within A; e.g. granddaughter), brother or sister, nephew or niece. * €15,075 (Group C) where the beneficiary's relationship to the disponer is: cousin or stranger. For gifts and inheritances taken on or after 5 December 2001, only prior benefits received since 5 December 1991 from the same beneficiary within the same group threshold are aggregated with the current benefit in computing tax payable on the current benefit. An inheritance, but not a gift, taken by a parent from his or her child is treated as group A, where it is an immediate interest (but not a life interest) in property.
/ref> In certain circumstances, the beneficiary may take the place of his/her deceased spouse for the purpose of determining the applicable group where that spouse died before the disponer and was a nearer relative to the disponer.


Other exemptions

The other main exemptions from capital acquisitions tax are: * Property passing between spouses is exempt from CAT. The exemption also applies to property passing by Court order between separated or divorced couples. * Principal private residence. To qualify, the recipient must have lived: for three years ending on the transfer date in the residence, or for three of the four years ending on the transfer date in the residence and the residence which it has replaced. In addition, the recipient must not have any other private residence and they must not dispose of the residence for six years after the transfer to them. * The first €3,000 of gifts taken in each calendar year by a beneficiary from a disponer is exempt. * A gift or inheritance taken for public or charitable purposes is exempt. * Objects of national, scientific, historic, or artistic interest, which the public are allowed to view, are exempt. This relief also extends to heritage property owned through a private company. * Pension lump sums are exempt. * Certain government securities acquired by a beneficiary who is not domiciled or resident in the State from a disponer who held them for at least three years. * Personal injury compensation or damages, and lottery winnings are exempt. This exemption also covers reasonable support, maintenance, or education payments received by a minor child at a time when the disponer and the child's other parent are dead. * Property acquired under a self-made disposition is exempt. * An inheritance by a parent from a child, where the child took a non-exempt gift or inheritance from either parent within the past five years, is exempt.


Reliefs

The other main reliefs from capital acquisitions tax are: * A surviving spouse may take the place and relationship status in respect of property acquired by the deceased spouse. * Agricultural relief. This applies to a farmer – an individual who on the valuation date is domiciled in the State, and at least 80% of the gross market value of his assets consists of agricultural property (i.e., farm land and buildings, crops, trees and underwood, livestock, bloodstock, and farm machinery). * The relief is a 90% reduction of the full market value. The relief may be withdrawn if the property is later disposed of within six years of the date of the gift or inheritance and the proceeds are not reinvested within one year of the disposal (six years in the case of a compulsory acquisition). * Business relief. This applies to relevant business property, i.e., a sole trade business, an interest in a partnership, and unquoted shares in an Irish incorporated company. * The relief is a 90% reduction of the taxable value. The relief may be withdrawn if the property is later disposed of within six years of the date of the gift or inheritance and the proceeds are not reinvested within one year of the disposal. * Favorite nephew (or niece) relief. * Double taxation in respect of US and UK equivalent taxes. * The proceeds of a life assurance policy taken out to pay inheritance tax or gift tax. * If the same event gives rise to a liability to both CAT and CGT, the CGT charge may be credited against the CAT up to the amount of the CAT charg.e


CAT Return

When a person receives a gift or inheritance that, either by itself, or aggregated with prior benefits taken by the donee, would place him in a position of having used up more than 80% of any group threshold, he must complete form IT38 and return it to Revenue within four months, along with any tax due.Revenue.ie
/ref>


Discretionary trust tax

Assets placed in discretionary trusts are subject to: * a once-off charge of 6%, and * an annual charge of 1%. The charges must be paid within three months of the "valuation date", which may be the date the trust was set up, the date of death of the settlor, the earliest date on which the trustees could retain the trust property, the date on which the trustees retained the trust property, or the date of delivery of the trust property to the trustees.


Withholding taxes

Several charges described as taxes are not, in the literal sense, actual taxes, but
withholding Tax withholding, also known as tax retention, Pay-as-you-earn tax, Pay-as-You-Go, Pay-as-You-Earn, Tax deduction at source or a ''Prélèvement à la source'', is income tax paid to the government by the payer of the income rather than by the reci ...
s from certain payments made. In each case, the payer withholds the relevant percentage and pays it to Revenue. The recipient is still liable for tax on the full amount, but can set the withholding against his overall tax liability. If the amount withheld is less than the tax payable, the recipient is still liable for the difference, and if the amount withheld exceeds the tax payable, the recipient can set it off against other tax due, or obtain a refund. This contrasts with DIRT, which, while a withholding tax, discharges the entire tax liability of the recipient.


Relevant Contracts Tax

Relevant Contracts Tax (RCT) is a withholding regime applied to contractors in the forestry, construction, and meat processing sectorsRevenue.ie
/ref> where tax non-compliance levels have historically been high. On 13 December 2011, the Minister for Finance signed the Commencement Order for the new electronic RCT system which was introduced on 1 January 2012. All principal contractors in the construction, forestry and meat processing sectors are obliged to engage electronically with Revenue. Under the new RCT system, a principal contractor must provide Revenue with details of the contract and the subcontractor. It must also notify Revenue of all relevant payments online before payment is made. Revenue will respond to the payment notification with a deduction authorisation setting out how much tax, if any, must be withheld. The rates are currently set at 0%, 20% or 35%. This deduction authorisation is sent electronically to the principal contractor. The principal must provide a copy or details of the deduction authorisation to the subcontractor if tax has been deducted. The subcontractor can set off the amount deducted against any tax he is liable to pay, or reclaim the difference where the deduction exceeds the amount of tax. Since September 2008, the subcontractor no longer charges or accounts for VAT on supplies of construction services to which RCT applies. Instead, the principal contractor must account for the VAT to Revenue (although he will generally be entitled to an input credit for the same amount). This system is referred to as the VAT reverse charge.


Dividend Withholding Tax

Dividend Withholding Tax is deducted at the rate of 20% from dividends paid by Irish companies. It can be set off against income tax due, or reclaimed where the recipient of the dividend is not liable to tax.


Professional Services Withholding Tax

Professional Services Withholding Tax (PSWT) is deducted at the rate of 20% from payments made by government bodies, health boards, state bodies, local authorities, and the like, from payments made for professional services. Professional services include medical, dental, pharmaceutical, optical, aural, veterinary, architectural, engineering, quantity surveying, accounting, auditing, finance, marketing, advertising, legal, and geological services, as well as training services supplied to FÁSRevenue.ie
It can be deducted from the tax ultimately payable by the service provider, or where the provider is non-resident or exempt from tax, reclaimed.


Other taxes

An assortment of other taxes are charged in Ireland, which do not fit under any other heading.


Local Property Tax (LPT)

This was introduced in the Finance Act of 2013, this Tax is levied for most properties at 0.18% of the self-assessed market value. The value assessed is the value in May 2013 initially. This initial valuation will be used until the next assessment date in November 2016. A higher rate of 0.25% of market value – the so-called ''Mansion Tax'' applies to properties valued at greater than €1,000,000.


Plastic bag levy

Since March 2002, a levy, called the Environmental Levy, has applied to the supply of plastic
shopping bag Shopping bags are medium-sized bags, typically around 10–20 litre The litre (international spelling) or liter (American English American English, sometimes called United States English or U.S. English, is the set of variety (ling ...
s by retailers.Waste Management (Environmental Levy) (Plastic Bag) Regulations, 2001
/ref> The levy is currently 22 cents per plastic bag. s The levy does not apply to: *Small bags used solely to contain any of the following, whether packaged or not: **Fresh fish and fresh fish products **Fresh meat and fresh meat products **Fresh poultry and fresh poultry products *Small bags used solely to contain unpackaged: **Fruit, nuts, or vegetables **Confectionery **Dairy products **Cooked food, whether cold or hot **Ice *Bags supplied on board an aircraft or ship *Bags supplied airside in an airport or in the passenger-only area of a port, for the purpose of carrying the goods on board an aeroplane or ship *Bags sold for 70-cent or more A small bag is one smaller than 225mm wide, 345mm deep, and 450mm long (including handles). The law requires that the levy be passed on to customers.


Vehicle Registration Tax

Vehicle Registration Tax or VRT is chargeable on registration of a
motor vehicle A motor vehicle, also known as motorized vehicle or automotive vehicle, is a self-propelled land vehicle, commonly wheeled, that does not operate on rails (such as trains or tram A tram (called a streetcar or trolley in North Ameri ...
in Ireland, and every motor vehicle brought into the country, other than temporarily by a visitor, must be registered with Revenue and must have VRT paid for it by the end of the working day after it arrives in the country. Vehicles are assessed under five categories for VRT, depending on the type of vehicle.Revenue.ie
* Category A includes cars,
jeep Jeep is an American automobile brand, marque, now owned by multi-national corporation Stellantis. Jeep has been part of Chrysler since 1987, when Chrysler acquired the Jeep brand, along with remaining assets, from its previous owner American ...
s, and
minibus A minibus, microbus, minicoach, or commuter (in Zimbabwe) is a passenger-carrying motor vehicle that is designed to carry more people than a minivan, multi-purpose vehicle or minivan, but fewer people than a bus, full-size bus. In the United ...
es having fewer than 12 seats, not including the driver. The tax chargeable is based on
carbon dioxide Carbon dioxide ( chemical formula ) is a chemical compound made up of molecules that each have one carbon Carbon () is a chemical element with the chemical symbol, symbol C and atomic number 6. It is nonmetallic and tetravalence, tetraval ...
emissions per kilometre, ranging from 14% of open market selling price (for vehicles emitting under 120g CO2/km) to 36% of open market selling price (for vehicles emitting over 226g CO2/km). * Category B includes car- and jeep-derived vans. The rate of VRT is 13.3% of the open market selling price, with a minimum of €125. * Category C includes commercial vehicles, tractors, and buses having at least 13 seats (including the driver). The VRT chargeable is €50. * Category D includes ambulances, fire engines, and vehicles used for the transportation of road construction machinery. Vehicles in category D are exempt from VRT.


Motorcycles

Motorcycles and motor scooters are chargeable for VRT by reference to the
engine displacement Engine displacement is the measure of the cylinder (engine), cylinder volume swept by all of the pistons of a piston engine, excluding the combustion chambers. It is commonly used as an expression of an engine's size, and by extension as a loos ...
, at a rate of €2 per cc for the first 350cc and €1 per cc thereafter. There is a reduction depending on the age of the vehicle, from 10% after three months to 100% (completely remitted) for vehicles over 30 years old.


Electric and hybrid vehicles

Electric vehicle An electric vehicle (EV) is a vehicle that uses one or more traction motor, electric motors for propulsion. It can be powered by a Current collector, collector system, with electricity from extravehicular sources, or it can be powered autonom ...
s and
hybrid vehicle A hybrid vehicle is one that uses two or more distinct types of power, such as submarines that use diesel when surfaced and batteries when submerged. Other means to store energy include pressurized fluid in hydraulic hybrids. The basic princip ...
s can have a remission or repayment of VRT of up to €2,500 until the end of 2010.


VAT

VAT is chargeable (on the VRT-inclusive price) on new vehicles (but not tractors) imported unregistered or within six months of registration outside Ireland, or on vehicles with an
odometer An odometer or odograph is an instrument used for measuring the distance traveled by a vehicle, such as a bicycle or car. The device may be electronic, mechanical, or a combination of the two (electromechanical). The noun derives from ancient Gr ...
reading under 6,000 kilometres at import.


Penalties

A vehicle on which VRT should have been paid but was not is liable to be seized.


Non-principal private residence levy

The owner of a house other than a principal private residence must pay a charge, €200, per year.NPPR.ie
/ref> The charge for 2009 was payable in September, but in subsequent years, it is payable in March. The charge applies to "residential properties", which includes a house, maisonette, flat, or apartment, but excludes: *Buildings which are of scientific, historical, architectural or aesthetic interest and are open to the public, subject to approval of the
Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media The Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media ( ga, An tAire Turasóireachta, Cultúir, Ealaíon, Gaeltachta, Spóirt agus Meán) is a senior minister in the Government of Ireland The Government of Ireland ( ga, Rialtas ...
and Revenue *A building which is part of the trading stock of a business and has never been used as a dwelling, nor has any income been derived from it *A building let by a minister of the
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government ...
, a housing authority, or the HSE *A building let by a body approved by a housing authority *A building let to a housing authority, or to the HSE *A building subject to commercial rates Additionally, the following persons are exempt from paying the charge in respect of the building or buildings in question: *A person occupying a building as his sole or main residence (which includes a person who so occupies part of a building and claims rent-a-room relief on the remainder) *A charity or a discretionary trust *A divorced or separated person whose former spouse lives in the building *An incapacitated person living in a place which he does not own (e.g. a nursing home) *A person who allows a relative to reside, free of rent, in a building within 2 kilometres of his own residence (vernacularly called a "granny flat") If the charge is unpaid, it has the effect of a
charge Charge or charged may refer to: Arts, entertainment, and media Films * '' Charge, Zero Emissions/Maximum Speed'', a 2011 documentary Music * ''Charge'' (David Ford album) * ''Charge'' (Machel Montano album) * '' Charge!!'', an album by The Aq ...
in favour of the local council against the property. A person who moves house is not liable to the charge in respect of either of the houses that year.


Motor tax

Motor tax, payable to the local council where the owner lives, arises when a car or other motor vehicle is used on a public road.Environ.ie
/ref> A circular receipt, known colloquially as a ''tax disc'', is issued on payment and must be displayed in the front of the vehicle. Certain vehicles, including state-owned vehicles, fire engines, and vehicles for disabled drivers are exempt from motor tax. Motor tax may be paid for three, six, or 12 months, although paying annually is cheaper. It can be paid online; verification of insurance details is required to get a tax disc. The tax for private cars first registered from July 2008 is calculated on the basis of
carbon dioxide Carbon dioxide ( chemical formula ) is a chemical compound made up of molecules that each have one carbon Carbon () is a chemical element with the chemical symbol, symbol C and atomic number 6. It is nonmetallic and tetravalence, tetraval ...
emissions; for cars registered before that, the rate depends on
engine displacement Engine displacement is the measure of the cylinder (engine), cylinder volume swept by all of the pistons of a piston engine, excluding the combustion chambers. It is commonly used as an expression of an engine's size, and by extension as a loos ...
.Environ.ie
/ref> Goods vehicle tax rates are determined based on
gross vehicle weight Vehicle weight is a measurement of wheeled motor vehicles; either an actual measured weight of the vehicle under defined conditions or a gross weight rating for its weight carrying capacity. Curb or kerb weight Curb weight (U.S. English) or kerb ...
,Environ.ie
/ref> the tax for buses is based on the number of seats, and flat rates apply to other types of vehicles.


Taxation evasion and tax avoidance

Tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trust (property), trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities ...
in Ireland, while a common problem historically, is now not as widespread. The reasons are twofold – most people pay at source (PAYE) and the penalties for evasion are high. The Irish Revenue target specific industries every year. Industries have included fast food take away restaurants, banks and farmers.
Tax avoidance Tax avoidance is the legal usage of the tax regime in a single territory to one's own advantage to reduce the amount of tax that is payable by means that are within the law. A tax shelter is one type of tax avoidance, and tax havens are jurisd ...
is a legal process where one's financial affairs are arranged so as to legitimately pay less tax. In some cases the Revenue will pursue individuals or companies who avail of tax avoidance; however their success here is limited because tax avoidance is entirely legal. The areas where tax evasion can still be found are businesses that deal in a lot of cash. The trades, small businesses, etc., will sell goods and perform services while accepting cash for the good/service. The buyer will avoid paying VAT at 21% and the seller does not declare the monies for Income Tax. Revenue perform random audits on businesses to discourage and punish this. Businesses are regularly taken to court for tax evasion. Revenue claim a business will be audited roughly every seven years. Other methods have also been employed by government to combat tax evasion. For example, the introduction of a Taxi Regulator and subsequent regulations for the taxi industry has meant that the opportunities for taxi drivers to avoid declaring cash income have dwindled. By law, taxi drivers must now issue an electronic receipt for each fare, effectively recording their income.


Local taxes

Prior to 1977, all property owners in Ireland had to pay "
rates Rate or rates may refer to: Finance * Rates (tax), a type of taxation system in the United Kingdom used to fund local government * Exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for anoth ...
" – based on the "rateable valuation" of the property – to the local council. Rates were used by local authorities to provide services such as mains water and refuse collection. Rates for private residences were abolished in 1977, with local authorities instead receiving funding from central government. They continue in operation for commercial property. In recent years, the government has introduced new local taxes. A charge for water will be introduced by 2014. A bin tax, for domestic refuse collection, was introduced in the last 15 years. Opponents claim that this is double-taxation – that in the aftermath of the abolition of domestic rates in 1977, their taxes were increased to fund local authorities. However, with the ever-rising cost of providing these services, council funding is no longer sufficient to cover costs and user charges would free up council budgets for more worthwhile projects. Motor tax is paid into the Local Government Fund and is distributed among local authorities.


See also

*
Economy of the Republic of Ireland The economy of the Republic of Ireland is a highly developed knowledge economy The knowledge economy (or the knowledge-based economy) is an economic system An economic system, or economic order, is a system of Production (economics), ...
* Personal Public Service Number (PPSN) *
Modified gross national income Modified gross national income, Modified GNI or GNI* was created by the Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Republic of Ireland, Ireland's central bank, and as such part of the Europe ...
GNI* replacement for GDP


References


Notes


Footnotes


Sources

* PricewaterhouseCoopers Ireland (2018)
''Tax Facts 2018''


External links


Revenue.ie
the Irish Revenue Commissioners
Tax System in Ireland
overview from the Irish Revenue Commissioners
PwC Ireland Tax Facts 2018
PricewaterhouseCoopers (Ireland) on Ireland's tax system

KPMG (Ireland) on Ireland's tax system
Ernst & Young Tax Portal
E&Y (Ireland) on Ireland's tax system
Irish Tax Institute (ITI)
main tax body for Irish tax professionals
Irish Statute Book
Irish State portal for Tax Acts
Citizens Information: Tax Section
free tax advice from Irish State body (Citizens Information) {{DEFAULTSORT:Taxation in the Republic Of Ireland Department of Finance (Ireland) Law of the Republic of Ireland
Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...