Taxable income includes all amounts, whether in cash or non-cash benefits, arising from an office or employment (e.g. salary, wages, fees, overtime, bonuses, commissions, benefits in kind, assignment related allowances).
Non-cash benefits may include the use of a car, accommodation, other assets or loans at low interest rates, medical and life insurance plans and pension plans in certain circumstances.
Irish PAYE must also be applied to earnings (including non-cash benefits) from a non-Irish employment where the duties of that employment are performed in Ireland.
The portion of the income that relates to foreign duties that is not required to be subject to PAYE may qualify for the favourable basis of taxation known as the Remittance Basis where the recipient of the income is a qualifying individual.
Where the duties of the foreign employment are performed in Ireland for not more than 60 days in total in the tax year and the employee is resident in a country with which Ireland has a double tax treaty (DTT), the Irish Revenue Authorities will not require an employer to operate PAYE, provided certain conditions are met.
Where free or discounted shares are awarded, a taxable benefit arises and employers are required to withhold income tax, USC, and employee PRSI.
Finance Bill 2023 has altered the mechanism for taxations of stock options. From 1 January 2024, stock options will be taxable with the Irish PAYE system. An employer now has the responsibility to collect payroll taxes on an exercise of a stock option.
Employee PRSI applies to all share-based remuneration.
Income from a self-employment (i.e. profits or gains of a trade, profession, or vocation) that is carried on within Ireland is subject to Irish income tax whether or not the individual is an Irish resident.
An Irish domiciled individual who is Irish resident or ordinarily resident is liable to Irish capital gains tax (CGT) on worldwide gains.
A non-domiciled but Irish resident or ordinarily resident individual is liable to Irish CGT on the full amount of gains arising on the disposal of assets situated in Ireland and on the portion of other foreign gains that are remitted to Ireland.
A non-Irish resident individual who is also non-ordinarily resident is liable to Irish CGT on gains arising in Ireland from the disposal of Irish ‘specified’ assets (e.g. land and buildings in Ireland).
The current rate of CGT is 33%. A rate of 40% applies in the case of certain interests in funds and life assurance policies.
Annual gains of up to EUR 1,270 for an individual are exempt from CGT. This exemption is not transferable between spouses.
For disposals made between 1 January and 30 November (the initial period), the liability falls due on 15 December of the same year.
For disposals made between 1 December and 31 December (the later period), the liability falls due on 31 January of the following year.
For disposals made under a written contract, the time of disposal is usually the date of the contract.
Dividend withholding tax (DWT) applies to dividends and other distributions made by Irish resident companies, at the rate of 25%. Exemptions from DWT may apply in the case of certain categories of individuals who are neither resident nor ordinarily resident in Ireland.
Individuals who are resident but not domiciled in Ireland are liable to Irish income tax on foreign investment income to the extent that it is remitted into Ireland.
Interest on most Irish deposit accounts is paid after a deduction of Deposit Interest Retention Tax (DIRT), which is charged at a rate of 33%. Where interest is paid or credited on other deposit accounts (e.g. where interest is credited at maturity), income tax at the rate of 33% is deducted at source. DIRT effectively satisfies the full liability to tax.
Exemptions and repayments
The following can apply to have DIRT repaid or to have deposit interest paid to them without the deduction of DIRT:
- Individuals or their spouses or civil partners aged 65 or over who are not liable to income tax.
- Incapacitated individuals.
- Companies that do not have a corporation tax liability.
Net profit arising from a rental property is taxed at an individual's marginal rate of tax. Deductions in arriving at net profit include rates, management fees, maintenance, insurance, certain legal and accountancy fees, wear and tear on furniture and fittings, and repairs. A deduction is also allowed for interest on money borrowed for the purchase of, or repair to, the property. In the case of a rented residential property, interest relief is allowed at 100%, and the tenancy must be registered with the Private Residential Tenancy Board (PRTB).
The threshold in relation to deductible pre-letting expenses for landlords has also been increased to EUR 10,000. The premises must now only be vacant for a period of six months to qualify (reduced from 12 months).
In general, a net rental loss can be offset against profit from another property or carried forward against future rental profits. Foreign rental income losses can be offset against foreign rental income only.
If the landlord is not resident in Ireland, the tenant is obligated to withhold tax at the standard rate from the payment of the rent unless the landlord has appointed an Irish resident collection agent. Additional information is also required to be returned to Revenue by tenants and collection agents in respect of tax that has been withheld on rental payments made to non-resident landlords.
Rented Residential Relief
Tax relief for landlords will be available against rental income from residential property for tax years 2024 to 2027 inclusive. The relief is available to individual landlords only for tenancies registered with the Residential Tenancies Board or for lettings of a residential property to a public authority. Landlords are also required to have tax clearance and to comply with their Local Property Tax.
The relief will reduce the tax due on residential rental income by up to €600 in 2024, €800 in 2025, and €1,000 in 2026 and 2027. The relief is capped at the tax liability on the rental income and will be apportioned in the case of joint ownership of a property.
Rent a room scheme
Income from the letting, as residential accommodation, of a room in a person's principal private residence is exempt from tax where the gross annual rental income is not greater than EUR 14,000. In general, the relief does not apply to short-term lettings, although certain exceptions apply.
The relief does not apply where the letting is between connected parties.
Certain income tax exemptions exist depending on the personal circumstances of the taxpayer or the source of income. These include income from the following sources that may be exempt from income tax, subject to conditions:
- Childcare income: Income tax is not payable on the earnings of an individual from taking care of up to three children in the individual’s own home, provided the gross amount received is less than EUR 15,000 a year. Certain conditions apply.
- Artist exemption: The amount of profits and gains of certain writers, composers, and artists is treated as exempt from income tax subject to a limit of EUR 50,000. The exemption is also extended to non-resident artists who are resident or ordinarily resident in another member state or in another European Economic Area (EEA) state.
- Profits from occupation of certain woodlands: The total profits and gains are treated as exempt from income tax if the woodlands are managed on a commercial basis with a view to realising a profit.
- Profits from lotteries: The total profits from lotteries (granted under certain licences) are exempt from income tax.