Irish Income Taxes

• The Irish Income Tax System
• Am I Liable to Pay Tax in Ireland?
• How Do I Pay Tax in Ireland?
• What Are Irish Tax Credits?
• What Are the Tax Rates in Ireland?
• Irish Tax Returns
• What Is a P21?
• What Happens If I Have Overpaid or Underpaid Tax?
• What Happens When I Leave My Employment?
• What Do I Do If I’m Leaving the Country?
• Additional Resources

The Irish Income Tax System

Employees pay income tax through the Irish PAYE (Pay As You Earn) system. The PAYE system means that your employer deducts the tax that you owe directly from your wages prior to paying you. Your employer gives this tax directly to the Revenue Commissioners.

Am I Liable to Pay Tax in Ireland?

If you have spent 183 or more days in the tax year or 280 days over two years living in Ireland, then you are considered a resident for tax purposes. If you are out of Ireland for 30 days or less, it won’t be counted towards the 280 days. This means that you will be expected to pay tax on your income inside and outside of Ireland. On the other hand, non-residents only have to pay taxes on their income inside Ireland.

Be aware that Irish residents are liable to pay tax on both their Irish income as well as their foreign income, including foreign pensions. They are also liable for taxation in the foreign country, however, Ireland has double taxation agreements with a number of countries. Refer to the Tax Treaties section of the Irish Revenue website. You can obtain tax relief if your country of residence is among them.

How Do I Pay Tax in Ireland?

As soon as you get a job, you need to apply to the Department of Social Protection for a Personal Public Service Number (PPSN). Once you receive your PPSN, give it to your employer.

You then need to apply for a certificate of tax credits by completing the tax Form 12A which you can get from your employer or from the Irish Revenue Department website. Take the time to complete this Form 12A honestly and accurately and renew it if your circumstances change, otherwise you could find yourself in trouble for falsely claiming tax credits as the Revenue department carries out regular revenue audits.

Once completed, the Form 12A needs to be given to the local tax office. They will then send you a certificate of tax credits and provide a copy to your employer so that they can correctly tax your pay. If you don’t get this completed, then eventually your employer will have to apply the much higher emergency tax rate until you have this in place.

What Are Irish Tax Credits?

Tax credits reduce the amount of income tax that you are required to pay. The tax credits you receive are dependent on your personal circumstances, for example, the single person tax credit and married person’s tax credits. For more information, visit the Irish Revenue Department website.

What Are the Tax Rates in Ireland?

The amount of tax that you pay depends on your personal circumstances and the tax credits that you are eligible for. For the current tax rates, visit the Irish Revenue Department.

Irish Tax Returns

Your employer will give you a P60 at the end of the year. The P60 is a statement of your wages and the total tax that you have paid for the year. If you have not earned any other income during the financial year, you may not have to file a tax return. However, you can opt to complete the tax Form 12 in order to claim tax relief on tax credits and allowances like medical expenses. You can obtain this form from the tax office or the Irish Revenue website.

However, you must to lodge a self-assessed tax return if you are a:

• Contractor
• Subcontractor
• Self-employed
• Company director
• Landlord
• Receive other income in addition to your PAYE income e.g. investments.
• Belong to an employee share scheme.

You can lodge your tax return by sending it into the tax office. Alternately, you can lodge your tax return online using the Revenues On-Line Service (ROS). In order to use this service you must complete the ROS registration process. You will then be issued a personal ROS access number in the mail which will enable you to file your tax return online. After lodging your tax return, the tax office will provide you with a statement of your tax liability called a P21.

What Is a P21?

A P21 is your statement from the tax office that displays:

• Your total income for the financial year
• Your tax credits
• The total tax that you have paid for the financial year

The statement will advise you on whether you have overpaid or underpaid your taxes for the financial year. If you are applying for a loan or mortgage, you may need to give your P21 to the bank as proof of your earnings.

What Happens if I Have Overpaid or Underpaid Tax?

If you have overpaid tax, it will be paid to you either by cheque or into your bank account if you have given Revenue your bank details. If you have not paid enough tax, then you can pay the outstanding amount by:

• Posting your payment in the pre-paid envelope that will have been provided with your P21.
• Pay it in person at the Collectors-Generals office.
• Pay by bank transfer.

What Happens When I Leave My Employment?

Your employer must give you a P45, which is a statement of your pay and how much tax that they have deducted. This form is essential and must be given to your new employer. If you have become unemployed, you will need the P45 to claim a tax refund and to apply for social welfare benefits.

What Do I Do If I’m Leaving the Country?

Make sure that you obtain your P45 from your employer. You may be eligible for a tax refund. To apply, complete the tax Form P50 which is available from your local tax office and the Revenue Department website.

Additional Resources

• The Irish Revenue website has helpful guidance for those moving or returning to Ireland.
• If you are self-employed, here is a guide to self-assessment.
• Starting your own business? Here is a new business tax guide.
• Calculate your tax income using this guide.
• For US expats living in Ireland, here is a guide on how Irish taxes will impact your US expatriate tax return.