Income Tax | 2005 | Summary
 |
Charge to tax
Individuals and non-corporate persons
Income tax is charged on income of individuals, unincorporated bodies (s 1044), trustees (s 1046) and personal representatives (s 799).
Income of partnerships and European Economic Interest Groupings is charged on the individual partners (s 1008) or grouping members (s 1014).
Tax year
Income tax is charged on income arising in a tax year. Since 1 January 2002 the tax year coincides with the calendar year, i.e., the tax year 2005 runs from 1 January 2005 to 31 December 2005.
Residence
Resident individuals
An individual who is resident and domiciled in the State is liable to Irish income tax on his total income from all sources, i.e., his worldwide income.
An individual is regarded as resident in the State if he spends
(a) 183 days or more in the State in a tax year, or
(b) spends an aggregate of 280 days in the current and preceding tax year.
Presence in the State of not more than 30 days in a tax year is ignored for the purposes of the two year test (s 819).
An individual who is resident but not domiciled in the State (for example, a foreign national working in Ireland) is only taxed on foreign income to the extent that it is remitted to Ireland (s 71).
Non-resident individuals
A non-resident individual is taxed on Irish source income, i.e., income arising in the State. A non-resident who is ordinarily resident in the State is liable on foreign investment income in excess of €3,810 in the tax year. He is not liable in respect of income from an employment or trade carried on abroad (s 821).
An individual is ordinarily resident in the State if he was resident in the State in each of the three immediately preceding tax years. He ceases to be ordinarily resident when he has become non-resident for the three immediately preceding tax years (s 820).
A resident of a tax treaty country may be exempt, or due a credit, in relation to tax on Irish source income if that income is also taxed in the treaty country (see Double Taxation).
Income tax rates
Individuals and married couples
A married couple can opt to be treated for tax purposes as follows:
(a) joint assessment on the husband (s 1017) or wife (s 1018), separate assessment ( s 1023 ), or
(b) single assessment (s 1016).
Separated and divorced partners who have not remarried may also opt for joint or separate assessment (s 1026).
Income of individuals and married couples is taxed as follows ( s 15 (2)):
| Tax Year 2005 | Individual | Single parent | Married couple |
| At 20% (standard rate) | first €29,400 | first €33,400 | first €38,400 |
| At 42% (higher rate) | Balance | Balance | Balance |
In the case of a dual income married couple, the €38,400 rate band may be increased by the lower of:
(a) €20,400, and
(b) the income of the second spouse.
Therefore the maximum standard rate band a dual income married couple may have in the tax year 2005 is €58,800. However, the maximum part of the standard rate band that may be transferred between the partners of a dual income married couple in a tax year is €38,400.
Unincorporated bodies and trustees
Income of unincorporated bodies and trustees is taxed at the standard rate ( s 15 (1)). Income earned during the period of administration of an estate is taxed on the personal representatives (as trustees) at the standard rate (s 799-802).
Undistributed income of an accumulatory trust is subject to a 20% surcharge (s 805).
Exemptions
Exemption limits
An individual is exempt from income tax if his total income is below the appropriate exemption limit:
| Tax year 2005 | ||
| Individual | Married Couple | |
| € | € | |
| Aged under 65 | 5,210 | 10,420 |
| Aged 65 and over | 16,500 | 33,000 |
If the claimant has one or more dependent children, the exemption limit is increased as follows:
| Tax year 2005 | ||
| € | ||
| Each of first and second child | 575 | |
| Each of third and later children | 830 |
Where a claimant’s income only slightly exceeds the exemption limit, the excess is taxed at a special marginal rate of 40% (s 187,188).
Other exemptions
The other main exemptions from income tax are:
(a) Personal injury settlements (s 189), payments from the Haemophilia HIV Trust (s 190), Hepatitis C compensation ( s 191 ) and payments in respect of thalidomide victims ( s 192 ).
(b) Income of artists, writers and composers (s 195).
(c) Interest on savings certificates (s 42) and instalment savings schemes (s 197).
(d) Income of recognised charities ( s 207 , 208).
(e) Income from stallion fees (s 231) and greyhound fees (s 233).
(f) Income from commercial forestry (s 232).
(g) Income from patent royalties (s 234). The claimant must be Irish resident, and must have carried out in the State, solely or jointly, the research work which led to the patent.
(h) Income of amateur sports bodies (s 235).
(i) Rent from let farm land (s 664). The landlord farmer must be aged 55 or over, or unable through physical or mental incapacity to carry on his farming trade. Exemption is given for the lower of:
(i) the farm rental income surplus, or
(ii) €10,000, where the lease is for seven years or more, €7,500, in any other case.
(j) Rent-a-room relief (s 216A). A person’s income from letting rooms in his private residence is exempt provided the gross income does not exceed €7,620 in the tax year.
Schedules
Income is charged under four Schedules: Schedule C, Schedule D, Schedule E and Schedule F (s 12).
Schedule D
Schedule D is the heading under which business income is charged to tax. It has five Cases (s 18).
Case I and II
Case I charges the profits of a trade (s 2) and Case II charges the profits of a profession ( s 3 ). Employment grants are not regarded as trading income ( s 223 -226).
In computing his profits, a trader may deduct legitimate business expenses, including:
(a) expenditure on trademarks (s 86), and know how (s 768),
(b) pre-trading expenditure (s 82), and pre-commencement staff training costs (s 769),
(c) the cost of establishing an approved savings-related share option scheme for employees (s 519B).
He may be entitled to a double deduction for wages paid to a previously unemployed person (s 88A). He may claim a double rent allowance if his premises is located in a renewal incentive area:
(a) Custom House Docks Area (s 324),
(b) Resort area (s 354),
(c) Dublin Docklands (s 370),
(d) Qualifying area (s 372E),
(e) Qualifying rural area (s 372O).
He may not deduct private expenditure, capital expenditure (s 81) or entertainment expenditure (s 840).
Trading and professional profits for tax purposes are generally based on the profits of the accounts year ended in the tax year (s 61) with special rules for commencement (s 66) and cessation ( s 67 ) years and short-lived businesses ( s 68 ).
Land-dealing and farming
Profits from dealing in land are charged under Case I as trading profits ( s 640 , 641). From 1 December 1999, profits from the sale of residential land are taxed at special rate of 20% (s 644A). Capital profits realised by a landholder are charged under Case IV (s 643).
Profits from farming and market gardening are charged under Case I as trading profits (s 655). A full-time farmer may opt to be taxed on his average profits over a three year period (s 657).
Case III, IV, V
Case III charges untaxed interest and income from foreign property.
Case IV charges miscellaneous income not falling under any other heading.
Case V charges rental income. In computing his net rental income, a property landlord may deduct legitimate property-related expenses, including, from 1 January 2002, interest in relation to residential property (s 97). Premiums and disguised premiums are partly taxed as rental income ( s 98 -100), and may be regarded as deductible rental (s 102) or business ( s 103 ) expenses of the payer.
A property landlord may also, as regards expenditure incurred before 31 July 2006, obtain a deduction for building expenditure that may qualify for renewal incentives (s 372AP):
(a) the cost of constructing, converting or refurbishing:
(i) a residential premises in a qualifying area, in a qualifying rural area, in a town designated area, or on a street designated under the Living Over the Shop (LOTS) scheme,
(ii) approved third-level student residential accommodation,
(b) the cost of constructing approved park and ride facility residential accommodation,
(c) the cost of refurbishing multi-unit residential accommodation.
Profits under Case III-V for tax purposes are the actual profits arising in the tax year ( s 70 , 74, 75).
Schedule E
Schedule E is the heading under which employment income is charged to tax (s 119). The PAYE system obliges an employer to deduct tax at source from the wages and salaries of his employees ( s 985 ,986).
An employee is not allowed any deductions in computing his employment income, unless the expenditure is incurred wholly, necessarily and exclusively in the performance of the duties (s 114).
A termination payment is subject to tax (s 123) but the first €10,160 plus €765 for each year of service may qualify for exemption (s 201).
A payment under an agreed pay restructuring agreement (s 202) may also qualify for exemption, depending on the size of the percentage pay cut, as follows:
| Proposed pay cut | Basic exemption | Potential exemption for each year of service |
| € | € | |
| +20% | 10,160 | 765 |
| 15%-20% | 7,620 | 635 |
| 10%-15% | 7,620 | 255 |
Benefit in kind
An employee is also taxed on any expense allowances (s 117), benefit in kind (s 118), or preferential loans ( s 122 ) he obtains from his employer. A loan is regarded as preferential if the interest rate is less than 4.5% in the case of a mortgage loan, or 11% in the case of any other loan.
Benefit in kind treatment does not apply to an annual or monthly bus or train pass ( s 118 (5A)), or to subsidised creche facilities (s 120A) provided by the employer.
Share options received from the employer are also taxed, but only when exercised (s 128). Gains arising on share options exercised under a Revenue-approved scheme are liable to capital gains tax (20%) instead of income tax.
Share options acquired under an approved savings-related share option scheme are exempt from tax unless exercised within three years (s 519A) and the saver is exempt from tax on the interest on the savings ( s 519C ).
An employee may receive up to €12,700 worth of shares tax-free through an approved profit sharing scheme (s 510). This is increased to €38,100 for shares held in an employee share ownership trust for a minimum of 10 years. He may also obtain a tax deduction of up to €6,350 for shares bought through an employee share purchase scheme (s 479).
Company cars
From 1 January 2004, an employee is taxed on “notional pay” based on the cash equivalent of the benefit of use of a company car (s 121). This is calculated as a percentage of the car’s original market value (OMV), inclusive of duty and VAT, depending on the employee’s annual business mileage:
| Annual business mileage | Cash equivalent |
| Percentage of OMV | |
| 15,000 or less | 30% |
| 15,001 to 20,000 | 24% |
| 20,001 to 25,000 | 18% |
| 25,001 to 30,000 | 12% |
| 30,001 and over | 6% |
The figure arrived at can be further reduced by the amount required to be made good, and actually made good, by the employee directly to the employer in respect of the car’s running costs.
Civil service mileage rates
As an alternative to benefit in kind, an employee may opt to be paid agreed civil service mileage rates for using his private car for company business. From 1 January 2003, the mileage rates are:
| Engine capacity | |||
| Official annual kilometres | Up to 1200 cc | 1200 to 1500 cc | Over 1501 cc |
| Up to 4,000 | 83.92c | 97.91c | 116.39c |
| Over 4,000 | 42.47c | 48.77c | 54.30c |
An employee may also be paid subsistence at agreed civil service rates, without invoking a benefit in kind charge. From 1 September 2004, the agreed civil service subsistence rates are:
| Overnight allowances | Day allowances | ||||
| Class of allowance | Normal rate | Reduced rate | Detention rate | 10 hours or more | 5 to 10 hours |
| € | € | € | € | € | |
| A | 136.10 | 125.47 | 68.03 | 38.57 | 15.73 |
| B | 122.29 | 104.59 | 61.17 | 38.57 | 15.73 |
Schedule F
Schedule F is the heading under which dividend income is charged to tax (s 20).
Reliefs
Personal reliefs and tax credits
The personal reliefs and tax credits that may be used to reduce an individual’s income tax liability are as follows:
| As a deduction when computing taxable income | ||
| € | € | |
| Single | Married | |
| Carer for incapacitated person(s 467) | 30,000 | |
| Medical expenses (s 469) | ||
| Permanent health contributions (s 471) Max 10% | ||
| Previously long-term unemployment person (s 472A) | ||
| Tax year in which employment begins | 3,810 | |
| Potential increase for each child | 1,270 | |
| Second tax year | 2,540 | |
| Potential increase for each child | 850 | |
| Third tax year | 1,270 | |
| Potential increase for each child | 425 | |
| Seafarer allowance (s 472B) | 6,350 | |
| Employee share purchase schemes(s 479) | 6,350 | |
| Film investment (s 481) | 25,400 | 50,800 |
| Expenditure on heritage buildings/gardens (s 482) | 31,750 | |
| Gifts to the Minister for Finace (s 483) | ||
| BES investment (s 490) | 31,750 | 63,000 |
| Owner-occupier allowance | ||
| As a tax credit against tax inability | ||
| € | € | |
| Basic personal tax credit (s 461) | 1,580 | 3,160 |
| One parent family (s 462) | 1,580 | |
| Widowed person (bereavement year)(s 461) | 3,160 | |
| Widowed person (other years)(s 461A) | 300 | |
| Widowed parent (s 463) | ||
| First year after bereavement | 2,800 | |
| Second year after bereavement | 2,300 | |
| Third year after bereavement | 1,800 | |
| Fourth year after bereavement | 1,300 | |
| Fifth year after bereavement | 800 | |
| Person aged 65 or more (s 464) | 205 | 410 |
| Incapacitated child (per child)(s 465) | 1,000 | |
| Dependent relative (per relative)(s 466) | 60 | |
| Home carer (s 466A) | 770 | |
| Blind person (s 468) | 1,000 | 2,000 |
| Employee (s 472) | 1,270 | |
| Trade union subscription (s 472C)(max) | 26 | |
| Rent paid by other persons (s 473)(max) | 600 | 600 |
| Widowed person | 600 | |
| College fees (s 473A)(max) | 1,000 | |
| Training course fees (s 476)(max) | 254 | |
| Local authority service charges(s 477) | ||
Other reliefs
The other main reliefs from income tax are:
(a) Bridging loan interest (s 245) and interest on money borrowed to invest in a company (s 248) or partnership ( s 253 ).
(b) Compensation for change in work practices (disturbance money) (s 480).
(c) Employee pension contributions (s 776). For 2003 and later tax years the contribution limits, whether through an employer scheme or Personal Retirement Savings Account (PRSA), are:
aged under 30: 15% of earnings.
aged 30-39: 20% of earnings.
aged 40-49: 25% of earnings.
aged 50 or more: 30% of earnings.
This 30% limit also applies to sportsmen and sportswomen. If the contributions are paid through a payroll system, income tax, PRSI and health levy will then be charged on salary net of contributions.
The overall annual earnings limit for employee pension contributions is €254,000 (s 787B).
(d) Self-employed pension contributions (s 787).
The current contribution limits are:
aged under 30: 15% of net relevant earnings.
aged 30-39: 20% of net relevant earnings.
aged 40-49: 25% of net relevant earnings.
aged 50 or more: 30% of net relevant earnings. This 30% limit also applies to sportsmen and sportswomen.
The overall deduction limit for net relevant earnings is €254,000.
(e) Covenants. To be tax effective, a covenant must be payable to:
(i) a human rights body, or to a recognised college to carry out research, and exceed, or be capable of exceeding three years, or
(ii) an individual who is aged 65 or over, or permanently physically or mentally handicapped, and exceed, or be capable of exceeding six years.
The maximum part of a donor’s income that may be covenanted is 5%, but this limit does not apply to income covenanted to an individual who is permanently physically or mentally handicapped (s 792).
(f) Stock relief (farmers). This is given at 25% of the increase in stock value (s 666), 100% in the case of a young trained farmer (s 667), and 100% to the extent that proceeds of compulsory livestock disposals are reinvested in replacement livestock ( s 668 ).
(g) Donations to Revenue-approved charities. If made by a self-employed person, the donor claims a deduction at his marginal tax rate. If made by a PAYE taxpayer, the donor completes a form for the charity and the charity gets a refund at the donor’s marginal tax rate (s 848A).
(h) Donations to approved sports bodies to fund capital projects. If made by a self-employed person, the donor claims a deduction at his marginal tax rate. If made by a PAYE taxpayer, the donor completes a form for the sports body and the sports body gets a refund at the donor’s marginal tax rate (s 847A).
Capital allowances
In computing tax due on business profits, the Tax Acts do not give any allowance for depreciation of business assets. Instead, the taxpayer is given a capital allowance over several chargeable periods until the cost of the asset has been fully allowed.
Capital allowances are computed exclusive of grants (s 317) and VAT (s 319).
Machinery or plant
Expenditure on or after 4 December 2002 on machinery or plant used in the business is given an annual wear and tear allowance of 12.5% (s 284). A similar allowance is given for expenditure on software (s 291).
If the disposal of an item of machinery or plant on which capital allowances were claimed results in an underclaim (or overclaim) a balancing allowance (or charge) may arise (s 288).
Cars
A car (new or secondhand) bought on or after 4 December 2002 and costing over €22,000 is given an annual 12.5% wear and tear allowance as if the car’s purchase price were €22,000 (s 373).
A taxi or short-term hire car is given an unrestricted write off of the purchase price at 40% per annum on a reducing balance basis (s 286).
Restrictions
A person carrying on a trade of leasing machinery or plant may only set off the related capital allowances against income from that trade (s 403). Capital allowances on assets let under a balloon lease may only be set against income from that lease (s 404).
Industrial buildings
An allowance for the cost of an industrial building used in the business may be given in the form of
(a) an industrial building annual allowance (also known as a writing down allowance) (s 272),
(b) an industrial building accelerated writing down allowance (also known as “free depreciation”) (s 273), or
(c) an industrial building (initial) allowance (s 271).
These latter two allowances are now generally restricted to qualifying premises located in renewal incentive areas.
If the disposal of an industrial building on which capital allowances were claimed results in an underclaim (or overclaim) a balancing allowance (or charge) may arise (s 274).
| Expenditure | Allowance | |||
| Industrial buildings (s 286(1)) | from | Annual | Accel. | Init. |
| Mill, factory, etc | 16/01/1975 | 4% | ||
| Mineral analysis laboratory | 25/01/1984 | 4% | ||
| Dock undertaking | 16/01/1975 | 4% | ||
| Airport runway or apron | 24/04/1992 | 4% | ||
| Market gardening | 1/04/1975 | 10% | ||
| Intensive cattle etc production | 1/04/1971 | 10% | ||
| Holiday cottages and camps* | 31/07/2008 | 15% | ||
| Hotel-keeping | 26/01/1994-3/12/2002 | 15% | ||
| 4/12/2002 | 4% | |||
| Airport building or structure | 27/03/1998 | 4% | ||
| Registered nursing home | 3/12/1997 | 15% | ||
| Private convalescent facility | 2/12/1998 | 15% | ||
| Private hospital | 15/05/2002 | 15% | ||
| Sports injury clinic | 15/05/2002 | 15% | ||
| Third level education buildings (s 843) | 1/07/1997-31/12/2004 | 15% | ||
| Childcare facilities ( s 843A) | 1/12/1998 | 15% | ||
| 1/12/1999 | 100% | |||
| Multi-storey carparks (s 344(6)) | 1/08/1998-31/07/2006* | |||
| Construction or refurbishment | 4% | 50% | 25% | |
| Qualifying areas*** ( s 372A) | 1/08/1998-31/07/2006* | |||
| Qualifying streets*** (LOTS)(s 372BA) | 6/04/2001-31/07/2006* | |||
| Ind. building const/refurb. (s 372C ) | 4% | 50% | 50% | |
| Comm. premises const/refurb. (s 372D ) | 4% | 50% | 50% | |
| Qualifying rural areas** (s 372L) | App day to 31/07/2006* | |||
| Ind. building const/refurb. (s 372M ) | 4% | 50% | 50% | |
| Comm. premises const/refurb. (s 372N ) | 4% | 50% | 50% | |
| Park and ride facilities (s 372U) | 1/7/1999-31/07/2006* | |||
| Qualifying facility const/refurb. (s 372V ) | 4% | 100% | 50% | |
| Comm. premises const/refurb. (s 372W ) | 4% | 100% | 50% | |
| Town designated areas (s 372AA) | 6/4/2001 to 31/07/2006* | |||
| Ind. building const/refurb. (s 372AC ) | 4% | 50% | 50% | |
| Comm. premises const/refrb. (s 372AD ) | 4% | 50% | 50% |
*The extension beyond 31/12/2004 only applies where a specified percentage of expenditure was incurred before the cut-off date.
**These allowances do not apply to buildings for use in the following business sectors: agribusiness, coal, fishing, motor vehicles, transport, steel, shipping, synthetic fibres, or financial services.
Restrictions: lessors
The accelerated industrial building annual allowance is only given to owner-occupiers; it is not given to lessors (s 273). Both owner-occupiers and lessors can claim the industrial building (initial) allowance.
Excess capital allowances from a trade of leasing holiday cottages may not be used to give rise to a tax repayment or to create or increase a loss (s 405).
No industrial building allowance is given in relation to a hotel for which a room ownership scheme exists (s 409).
The right of a lessor of an industrial building, or passive investor in an industrial building, to set excess capital allowances against other income is restricted to the lower of:
(a) the excess, or
(b) €31,750.
This restriction does not apply to a tourist building in a resort area, or a hotel (s 409A).
For capital expenditure incurred after 2 December 1997 the right of a lessor of a hotel, or passive investor in a hotel, to set excess capital allowances against other income is abolished (s 409B). This restriction does not apply to a hotel in an area of Cavan, Leitrim, Mayo, Monaghan, Roscommon or Sligo which is not a resort area, or a Bord Fáilte recognised holiday cottage.
Farm buildings, structures, milk quotas
Expenditure on farm buildings by a farmer may qualify for a farm building allowance of 15% in each of the first six years and 10% in the seventh year (s 658).
Expenditure during 1 January 2005 to 31 December 2009 on farm pollution control structures may qualify for:
(a) An allowance of 15% of the expenditure in each of the first six years of the writing down period, and 10% in the final year of the writing down period. The farmer may opt to take an increased allowance in any year of the writing down period equal to the lower of 50% of the expenditure or €31,750. If he does so, the balance is written off over the remaining years of the writing down period.
(b) Alternatively, an allowances of 331/3% over three years (s 659).
Expenditure on the purchase of a milk quota may be written off over a seven year period (s 669B).
Patent rights
An annual allowance of one-seventeenth of the expenditure is given for capital expenditure on patent rights (s 755).
Losses
An individual who makes a trading or professional loss may reduce his income from all sources by the amount of the loss (s 381). Any unused balance may be carried forward against trading or professional income of the next and later tax years (s 382).
A Case IV loss may be set against Case IV income and any unused balance may be carried forward against Case IV income of later tax years (s 384).
A Case V loss may be carried forward against rental income of the next and later tax years (s 385).
A loss in the final year of a trade or profession (a terminal loss) may be set against the income of the three immediately preceding tax years ( s 385 - 389).
Current capital allowances may be used to create or increase a trading or professional loss arising in the tax year’s basis year (s 392).
Double taxation
Double taxation is the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical purposes.
There are three basic methods of relieving double taxation on income:
(a) the tax paid in the foreign country may be deducted (as if it were a business expense) when calculating the income that is liable to Irish tax,
(b) the tax paid in the foreign country may be credited against the Irish tax payable on the same income, or
(c) the income arising in the foreign country may be exempted from Irish tax.
The Irish government has negotiated the following double tax treaties (s 826):
| Country | Treaty signed | Treaty ratified | SI No | Effective date | ||
| Income tax | Corporation tax | Capital gains tax | ||||
| Australia | 31 05 1983 | 21 12 1983 | 406/1983 | 6 04 1984 | 1 01 1984 | 6 04 1984 |
| Austria | 24 05 1966 | 5 01 1968 | 250/1967 | 6 04 1964 | 1 04 1964* | |
| (Protocol) | 19 06 1987 | 9 12 1988 | 29/1988 | 6 04 1976 | 1 01 1974 | 6 04 1974 |
| Belgium | 24 06 1970 | 31 12 1973 | 66 /1973 | 6 04 1973 | 1 04 1973* | |
| Bulgaria | 5 10 2000 | 5 01 2001 | 372/2000 | 1 01 2003 | 1 01 2002 | 1 01 2003 |
| Canada (1966) | 23 11 1966 | 6 12 1967 | 212/1967 | 6 04 1968 | 1 01 1968* | |
| Canada (2003) | 8 10 2003 | 01 01 2006 | 01 01 2005 | 1 01 2006 | ||
| China | 19 04 2000 | 29 11 2000 | 373/2000 | 6 04 2000 | 1 01 2000 | 6 04 2000 |
| Croatia | 21 06 2002 | 12 2002 | ||||
| Cyprus | 24 09 1968 | 4 12 1970 | 79/1970 | 6 04 1962 | 1 04 1962* | |
| Czech Rep | 14 11 1995 | 12 1995 | 321/1995 | 1 01 1997 | 1 01 1997 | 1 01 1997 |
| Denmark | 26 03 1993 | 8 10 1993 | 286/1993 | 6 04 1994 | 1 01 1994 | 6 04 1994 |
| Estonia | 16 12 1997 | 23 12 1998 | 496/1998 | 1 01 1999 | 1 01 1999 | 6 04 1999 |
| Finland | 27 03 1992 | 26 11 1993 | 289/1993 | 6 04 1990 | 1 01 1990 | 6 04 1990 |
| France | 21 03 1968 | 15 06 1971 | 162/1970 | 6 04 1966 | 1 04 1966* | |
| Germany | 17 10 1962 | 2 04 1964 | 212/1962 | 6 04 1959 | 1 04 1959* | |
| Greece | 24 11 2003 | 1 01 2005 | 1 01 2005 | 1 01 2005 | ||
| Hungary | 25 04 1995 | 5 12 1996 | 301/1995 | 1 01 1997 | 1 01 1997 | 1 01 1997 |
| Iceland | 17 12 2003 | 01 01 2005 | 1 01 2005 | 1 01 2005 | ||
| India | 6 11 2000 | 26 12 2001 | 521/2001 | 1 01 2002 | 1 01 2002 | 1 01 2002 |
| Israel | 20 11 1995 | 24 12 1995 | 323/1995 | 6 04 1996 | 1 01 1996 | 6 04 1996 |
| Italy | 11 06 1971 | 14 02 1975 | 64/1973 | 6 04 1967 | 1 04 1067* | |
| Japan | 18 01 1974 | 4 11 1974 | 259/1974 | 6 04 1974 | 1 04 1974* | |
| Korea (Rep) | 18 07 1990 | 27 11 1991 | 290/1991 | 6 04 1992 | 1 01 1992 | 6 04 1992 |
| Latvia | 13 11 1997 | 28 01 1998 | 504/1997 | 6 04 1999 | 1 01 1999 | 6 04 1999 |
| Lithuania | 18 11 1997 | 9 02 1998 | 503/1997 | 6 04 1999 | 1 01 1999 | 6 04 1999 |
| Luxembourg | 14 01 1972 | 25 02 1975 | 65/1973 | 6 04 1968 | 1 04 1968* | |
| Malaysia | 28 11 1998 | 11 09 1999 | 495/1998 | 6 04 2000 | 1 01 2000 | 6 04 2000 |
| Mexico | 22 10 1998 | 31 12 1998 | 497/1998 | 6 04 1998 | 1 01 1999 | 6 04 1999 |
| Netherlands | 11 02 1969 | 12 05 1970 | 22/1970 | 6 04 1965 | 1 04 1965* | |
| New Zealand | 19 09 1986 | 26 09 1988 | 30/1988 | 6 04 1989 | 1 01 1989 | 6 04 1989 |
| Norway (1969) | 21 10 1969 | 21 08 1970 | 80/1970 | 6 04 1967 | 1 04 1967* | |
| Norway (2000) | 22 11 2000 | 27 11 2001 | 520/2001 | 1 01 2002 | 1 01 2002 | 1 01 2002 |
| Pakistan | 13 04 1973 | 20 12 1974 | 260/1974 | 6 04 1968 | 1 04 1968* | |
| Poland | 13 11 1995 | 12 1995 | 322/1995 | 6 04 1996 | 1 01 1996 | 6 04 1996 |
| Portugal** | 1 06 1993 | 11 07 1994 | 102/1994 | 6 04 1995 | 1 01 1995 | 6 04 1995 |
| Romania | 21 10 1999 | 29 12 2000 | 477/1999 | 6 04 2001 | 1 01 2001 | 6 04 2001 |
| Russia | 29 04 1994 | 7 07 1995 | 428/1994 | 6 04 1996 | 1 01 1996 | 6 04 1996 |
| Slovak Rep | 8 06 1999 | 30 12 1999 | 426/1999 | 6 04 2000 | 1 01 2000 | 6 04 2000 |
| Slovenia | 12 03 2002 | |||||
| South Africa | 7 10 1997 | 5 12 1997 | 478/1997 | 6 04 1998 | 1 01 1998 | 6 04 1998 |
| Spain | 10 02 1994 | 21 11 1994 | 308/1994 | 6 04 1995 | 1 01 1995 | 6 04 1995 |
| Sweden | 8 10 1986 | 5 04 1988 | 348/1987 | 6 04 1988 | 1 01 1989 | 6 04 1988 |
| (Protocol) | 1 07 1993 | 21 12 1993 | 398/1993 | 20 1 1994 | 20 1 1994 | 20 1 1994 |
| Switzerland | 8 11 1966 | 16 02 1968 | 240/1967 | 6 04 1965 | 1 04 1965* | |
| (Protocol) | 24 10 1980 | 25 04 1984 | 76/1984 | 6 04 1976 | 1 01 1974 | 6 04 1974 |
| UK | 2 06 1976 | 23 12 1976 | 319/1976 | 6 04 1976 | 1 01 1974 | 6 04 1976 |
| (Protocol) | 7 11 1994 | 21 09 1995 | 209/1995 | 6 04 1994 | 1 04 1994 | |
| (Protocol) | 4 11 1998 | 23 12 1999 | 494/1998 | 6 04 1999 | 1 01 1999 | 6 04 1999 |
| USA | 28 07 1997 | 2 12 1997 | 477/1997 | 1 01 1998 | 1 01 1998 | 6 04 1998 |
| Zambia | 29 03 1971 | 31 07 1973 | 130/1973 | 6 04 1967 | 1 04 1967* |
*Corporation profits tax. New treaties are being negotiated with Argentina, Chile, Egypt, Kuwait, Malta, Morocco, Singapore, Tunisia, Turkey and Ukraine.
Older treaties with Cyprus and France are being renegotiated.
Self assessment
Pay and file
Self-employed persons and company owner-directors (s 950) must:
(a) pay preliminary tax (s 952) on or before the preliminary tax date, i.e., 31 October in the tax year ( s 958 (2)), and
(b) file an income tax return on or before the return filing date, i.e., 31 October following the tax year to which the return relates (s 951).
Therefore a self-employed person must:
(a) pay the preliminary tax for the tax year 2005, and
(b) file the tax return for the tax year 2004,
on or before the pay and file date, i.e., 31 October 2005.
Computational error
This rule applies where the return is filed and the tax is paid before the return filing date, but a computational error results in an underpayment of tax of not more than 5% of the tax liability. In such a case, the shortfall may be paid by the following 31 December provided it does not exceed the greater of:
(a) €3,175, or 5% of the tax payable for the year, whichever is lower, and
(b) €635.
Insufficient preliminary tax
Interest arises on the balance from the preliminary tax date if the preliminary tax paid is insufficient, i.e., if it amounts to less than:
(a) 90% of the ultimate liability for the period,
(b) 100% of the liability for the preceding period, or
(c) where the taxpayer pays by direct debit, 105% of the liability for the pre-preceding period.
Revenue powers
Administration
The Revenue Commissioners are responsible for the administration of income tax, corporation tax and capital gains tax (s 849). Inspectors of taxes appointed by the Revenue are responsible for the local administration of the tax (s 852).
Anti-avoidance
If an Irish resident individual has power to enjoy income arising to a non-resident, which the Irish resident has transferred to that non-resident, the income is deemed to be the income of the Irish resident (s 806).
If the Revenue form the opinion that a tax avoidance transaction is wholly artificial, they may assess the tax that in their opinion has been underpaid (s 811).
Information
Each of the following persons must file, on a self assessment basis, with its self-assessment return, a third party return of information or payments made:
(a) a property management agent (s 888),
(b) a business person who pays fees to a self-employed service providers (s 889),
(c) a commission agent (s 890),
(d) a bank that pays interest without deduction of tax (s 891),
(e) a nominee shareholder (s 892),
(f) a UCITS intermediary (s 893).
An auditor who becomes aware that his client has committed a relevant offence must report the offence to the client. He must then report the offence to the Revenue if it is not rectified within six months of being reported to the client (s 1079).
Audit
A person must keep records that will enable him to make a true tax return. This means he must keep a cash receipts book, a cheque payments book, a sales book, a purchases book, a register of assets and liabilities, and a record of asset acquisitions and disposals (s 886). Records may be stored electronically (s 887).
A Revenue inspector may inspect PAYE records (s 903), relevant contracts tax records (s 904) and may audit general business records ( s 905 ).
He may be accompanied by a member of An Garda Síochána (s 907).
He may require a financial institution to provide copies of bank statements (s 908).
He may require a taxpayer to submit a statement of affairs (s 909).
A Revenue inspector may check a third party return of information or payments made (s 899).
The Revenue may take criminal proceedings against a person who deliberately and defiantly refuses to comply with tax laws by failing to pay tax or file returns (s 1078).
Collection
Tax
The Collector-General (s 851) is responsible for collection of income tax (s 961), corporation tax ( s 974 ) and capital gains tax ( s 976 ). He may enforce collection of unpaid tax by:
(a) issuing a certificate to the appropriate sheriff or county registrar (s 962),
(b) suing for the tax as a civil debt in the District Court or Circuit (s 963) or High Court (s 966),
(c) taking bankruptcy proceedings against a person (s 999),
(d) issuing an attachment notice to a debtor of the defaulter (s 1002),
(e) requiring payment of arrears before issuing a tax clearance certificate (s 1094 , 1095).
He is entitled to offset repayments between taxes (s 1006A) and to appropriate tax payments as he sees fit ( s 1006B ).
A court seizure order in respect of a Revenue debt takes priority over other debts (s 971). Unpaid relevant contracts tax and PAYE estimates (s 1000), and corporation tax ( s 974 ), are preferential debts in company liquidation.
A taxpayer may pay income tax, corporation tax or capital gains tax by donating a heritage item to a State-owned or State-funded gallery, library or museum (s 1003).
Interest
For tax years to 2004 inclusive, interest on late income tax or corporation tax (s 1080) or capital gains tax (s 1083) accrues at the following daily rates for each day the tax remains unpaid:
| 01/04/2005 to payment | 0.0273% |
| 01/04/1998 – 31/03/2005 | 0.0322% |
| 01/08/1978 – 31/03/1998 | 0.041% |
| 01/05/1975 – 31/07/1978 | 0.0492% |
| 01/08/1971 – 30/04/1975 | 0.0246% |
| 06/04/1963 – 31/07/1971 | 0.0164% |
Interest on income tax or corporation tax ( s 1082 ) or capital gains tax ( s 1083 ) that remains unpaid due to fraud or neglect accrues at 2% for each month or part of a month the tax remains unpaid. This penalty rate ceases to have effect from 1 January 2005.
Surcharge
A self assessment return filed late, but within two months of the return filing date, is liable to a 5% surcharge, which may not exceed €12,695.
A self assessment return filed more than two months after the return filing date, is liable to a 10% surcharge, which may not exceed €63,485 (s 1084).
Withholding taxes
Dividend withholding tax
Companies resident in the State must deduct dividend withholding tax (DWT) at the standard rate from dividend payments and other profit distributions (s 172B).
The tax need not be deducted from distributions made to:
(a) an Irish resident company, a pension scheme, an employee share ownership trust, a collective investment undertaking, and a charity (s 172C),
(b) a non-resident who is resident in a tax treaty country, EU residents, and quoted companies (s 172D),
(c) a qualifying intermediary, provided the ultimate beneficiary is non-liable (s 172E).
The withheld tax may be credited against the dividend recipient’s tax liability for the tax year in which the dividend is received (s 172J).
Annual payments
An annual payment (for example, a covenanted payment) is a payment that is pure income profit in the hands of the recipient. Where a person makes an annual payment out of taxed income, the payer (not the recipient) is chargeable to tax on the payment and is entitled to retain tax at the standard rate from the amount of the payment (s 237).
Where a person makes an annual payment out of income not charged to tax, the recipient (not the payer) is chargeable to tax on the payment, and the payer must retain tax at the standard rate from the amount of the payment (s 238).
Deposit interest retention tax
Financial institutions must deduct deposit interest retention tax (DIRT) at the following percentage rates from interest payable on deposits:
(a) the standard rate (20%) from interest that is payable annually or more frequently, and
(b) the standard rate plus 3% (23%) from interest payable less frequently than annually (s 256).
DIRT deducted from general deposit account interest satisfies the account holder’s income tax liability but must be included in his return of income (s 261).
DIRT does not apply to accounts held by pension funds (s 265) and charities (s 266), provided they have completed the appropriate declaration.
Elderly persons may obtain a refund of DIRT (s 267).
Special savings incentive accounts (SSIAs)
From 1 May 2001, an investor who is resident in Ireland and aged 18 or over can open one five year special savings account. The investor must agree to save not more than €253.95 per month for the five year term, and not less than €12.70 per month in the first year. At the end of the five year term:
(a) For every €1 he has saved in the account, the government will add 25c.
(b) DIRT will be deducted from the investment return at 23%.
If a withdrawal is made before the end of the five year term, the amount withdrawn is taxed at 23%.
Professional services withholding tax
Professional services withholding tax (PSWT) must be deducted at the standard rate from payments made by an accountable person (government departments and State-funded bodies) for professional services (s 520) of:
(a) doctors, dentists, pharmacists, opticians and veterinary surgeons,
(b) architects, engineers, and quantity surveyors,
(c) accountants, auditors, and financial, economic, marketing, or business consultants,
(d) solicitors, barristers and other legal agents,
(e) geologists,
(f) providers of training services on behalf of FÁS.
Relevant contracts tax
Relevant contracts withholding tax (RCWT) must be deducted at 35% from payments made by a main contractor to an unauthorised subcontractor who has been engaged to carry out a relevant contract, i.e., construction operations, forestry operations, or meat processing operations on behalf of the main contractor ( s 530 , 531).
Penalties
A person who fails to file a return or provide information on request is liable to a penalty of €950 (s 1052). In the case of a return filed negligently, the penalty is €125 plus the difference between the correct liability and the tax paid (s 1053). In the case of a fraudulent return, the penalty is €125 plus twice the difference between the correct liability and the tax paid ( s 1054 ).
Appeals
A person aggrieved by an assessment to income tax or corporation tax may appeal within 30 days of the notice of assessment. The appeal may be settled before the appeal hearing by agreement between the inspector and the appellant or by withdrawal of the appeal (s 933).
The Appeal Commissioners must hear the evidence and order that the assessment be reduced, stand good, or be increased (s 934). They may summon and examine witnesses (s 939), and they may determine liability in cases of default ( s 940 ).
An aggrieved appellant may request that the appeal decision be reheard by a Circuit Court judge (s 942). If dissatisfied with the appeal decision on a point of law, the appellant or Revenue may request the Appeal Commissioners to state a case for the opinion of the High Court (s 943).
|
