The Irish tax year is aligned with the calendar year.
Under the self-assessment system, individuals with non-PAYE income over certain threshold and directors controlling 15% or more of the share capital of certain companies are obligated to file a tax return for the tax year by 31 October or mid-November if filed electronically on Revenue Online Service (ROS), following the year end. Tax returns can be filed with the Revenue Authorities by paper submission or using the ROS.
Payment of tax
Payment of tax under the self-assessment system is made in two instalments. Preliminary income tax for any year is due and payable by 31 October in that year. The tax paid must represent at least 90% of the individual’s final liability for that year, or 100% of the ultimate liability for the prior year. Alternatively, a taxpayer may elect to make a preliminary income tax payment payable in equal monthly instalments by way of direct debit equal to 105% of the ultimate liability for the pre-preceding year.
Any balance of income tax due for a year is payable by the following 31 October provided the individual has met their preliminary income tax liability. For individuals who file their tax return and pay their liability using the ROS, an extension to the payment and filing deadline of 31 October may be available.
Any income tax, PRSI and USC due on the exercise of stock options must be paid by the employee within 30 days following the date of exercise via the RTSO1 procedure.
Payment of CGT
For the tax year 2020, where chargeable gains are realised in the period 1 January 2020 to 30 November 2020, the CGT will be due for payment by 15 December 2020. Where chargeable gains are realised in the period 1 December 2020 to 31 December 2020, the CGT will be due for payment by 31 January 2021.
Tax audit process
The tax authority in Ireland is the Office of the Revenue Commissioners. An audit of an individual’s annual tax return can be conducted. The primary objective of a Revenue audit is to promote voluntary compliance with tax obligations. The functions of a Revenue audit include checking the accuracy of a tax return, checking the declaration of a liability or a claim for repayment, collection of tax, and the collection of interest and penalties.
Possible triggers of a Revenue audit include the selection by a random audit programme, computerised case selection based on risk analysis and profiling and a proactive system of intelligence gathering.
Statute of limitations
If the Inspector of Taxes in the Irish Revenue Commissioners considers that a complete tax return has not been made, or if no return was made where one should have been made, the Inspector may issue an assessment which includes estimates of the tax which is considered due. The assessments cannot be issued more than four years after the end of the tax year in question.
If the taxpayer disagrees with an assessment issued by the Inspector of Taxes, an appeal may be lodged by writing to the Inspector of Taxes within 30 days from the date of the Notice of Assessment. On receipt of an appeal the Inspector of Taxes may either revise the assessment having reviewed the grounds of the appeal or may list the case for a hearing before the Appeal Commissioners if the Inspector does not wish to revise the assessment.
In certain circumstances there is no time limit within which the Inspector can issue an assessment, for example if the Inspector considers that a return did not contain a full and true disclosure of relevant facts.
Topics of focus for tax authorities
Usually the Irish tax authorities focus on areas which have recently experienced changes. Therefore, it is likely that the tax authorities will focus on claims under the Special Assignment Relief Programme, Foreign Earnings Deduction (FED), and issues relating to share based remuneration, for example.
Additionally, attention is being focused on employee non-cash benefits, expenses, and employers' implementation of Real Time Reporting (RTR).