Taxes Consolidation Act 1997 section 790AA

Taxation of lump sum payments in excess of the lump sum limit

Section 790AA imposes a lifetime limit of €200,000 on the amount of retirement lump sums that can be received tax-free, and provides for a two-stage income tax charge on amounts exceeding that limit.

• The lifetime tax-free limit on all retirement lump sums paid to an individual on or after 7 December 2005 is €200,000; amounts between €200,001 and €500,000 are taxed at the standard rate of income tax under Case IV of Schedule D, and amounts exceeding €500,000 are taxed as emoluments under Schedule E at the individual's marginal rate.
• The administrator of the relevant pension arrangement and the individual are jointly and severally liable for the Case IV tax, regardless of whether either is resident or ordinarily resident in the State.
• The administrator must deduct and remit the tax to the Collector-General, file a return on Form 790AA within three months of the end of the month in which the lump sum is paid, and operate PAYE on any amount treated as emoluments under Schedule E.
• Since 1 January 2023, lump sums from foreign pension arrangements (taxable under section 200A) are aggregated with Irish pension lump sums for the purpose of the lifetime tax-free limit.

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