In Ireland, taxes are charged on the environment, health care, and education services, to name but a few. Taxes are ruled by the Revenue Commissioners.
In this article, we will tell you what every citizen or resident should know about paying taxes in Ireland, including the various types of taxes.
What Taxes Do You Have to Pay in Ireland?
The Irish Taxation System is based on a self-assessment system. This means you must file a tax return every year and declare your income and any taxes due. The Revenue Commissioners will then assess your return and send you a notice of assessment.
You will be refunded the difference if you have paid too much tax. On the other hand, if you have not paid enough tax, you will be required to pay the outstanding amount.
There are a number of different taxes that you may be liable for in Ireland, including:
- Income Tax
- Capital Gains Tax
- Value Added Tax (VAT)
- Corporation Tax
- Stamp Duty
What Is Income Tax?
Income tax is a tax that is levied on an individual’s income. The amount of income tax you pay depends on your income and the tax rate that applies to your income.
What Is Capital Gains Tax?
Capital gains tax is a tax that is levied on the profit you make when you sell an asset for more than its original purchase price. The amount of capital gains tax you pay depends on your profit and the tax rate that applies to your income.
What Is Value Added Tax?
Value Added Tax (VAT) is a tax levied on the sale of goods and services in Ireland. The VAT you pay depends on the price of the goods or services you purchase and the VAT rate that applies to those goods or services.
What Is Corporation Tax?
Corporation tax is a tax that is levied on the profits of companies and other legal entities. The amount of corporation tax you pay depends on your company’s profit and the tax rate that applies to your company’s profits.
What Is Stamp Duty?
Stamp duty is a tax levied on purchasing certain assets, such as shares, property, and motor vehicles. The amount of stamp duty you pay depends on the value of the asset you are purchasing and the stamp duty rate that applies to that asset.
What You Need to Know About Paying Taxes in Ireland
If you are an employee, your employer will deduct income tax and other taxes from your salary before they pay you. This is called PAYE (Pay As You Earn).
If you are self-employed, you are responsible for paying your own taxes. This includes income tax, capital gains tax, corporation tax and value added tax.
You can pay your taxes online through the Revenue Online Service (ROS). You will need a ROS account to do this. You can also pay your taxes by cheque or postal order. You should make your cheque or postal order payable to “Revenue Commissioners” and send it to your local Revenue office.
If you are paying taxes for the first time, you may need to register for self-assessment. This is a process whereby you calculate your own tax liability and file a return with Revenue. This is something we can help you with.
What Is My PPS Number? Will I Have to Give It to My Accountant?
The Personal Public Service (PPS) Number is your unique reference number in Ireland’s social welfare and taxation systems. It is also used by several other public bodies, such as the Health Service Executive (HSE).
All new applicants for social welfare payments, including Jobseeker’s Allowance, are required to have a PPS Number. If you have an existing PPS Number, you do not need to apply for a new one.
If you are employed, your PPS Number will be printed on your payslip. If you are self-employed, you will need to quote your PPS Number when filing your annual tax return. Your accountant will also need your PPS Number to file your tax return on your behalf.
If you do not have a PPS Number, you can apply for one by completing a form at your local social welfare office or revenue office. You will need to provide proof of identity, such as your passport or birth certificate. Once you have been allocated a PPS Number, you should keep it safe and confidential as it is your personal identifier. You should only ever give your PPS Number to organisations that are authorised to request it.
What Does Having a Tax Credit Certificate Mean?
Your tax receipt indicates the tax rate applicable to income, as well as any tax credits you can obtain on income. You can access and obtain tax credits online from Revenue through myAccount service.
Revenue issues you an automatic tax credit certificate before your taxes go into effect. Employable employees receive the Revenue Payroll Notice (RPN) to ensure that tax is deductible properly. In the event your circumstances shift over a certain period, Revenue will re-issue your credit certificate or RPN. Tax credit certificates and RPNs inform the employer how to calculate taxes.
Please contact your local Revenue office if you have any questions about your tax credit certificate or RPN. APM Accountants would also be happy to talk to you and answer questions about paying taxes in Ireland. You can contact us here.
Tax Rates and the Standard Rate Cut-Off Points
Taxes are assessed on income. Initially, your income will be taxed with an interest rate of 20%. The standard rates of tax and the amounts are known as the standard rate band of taxation. Your remaining income will be taxed at higher rates of 40%. If you earn enough cash, you can take out the higher taxes on that income and start paying more taxes.
The Irish government has also set a limit on how much you can earn before you begin to pay the higher rates of taxation called the personal allowance. The standard rate cut-off point is when your taxable income reaches the personal allowance level. In the 2022 tax year, this has been set at €36,800 for a single person.
Here’s an example of a standard rate cut-off point for a married couple or civil partners with two incomes:
The standard rate cut-off point for civil partners or a married couple is €45,800 if only one person is earning. If both are earning, the cut-off point for the second spouse or civil partner is €27,800 or the amount of the income of the second spouse, whichever is lower.
To illustrate:
Spouse A and Spouse B earned €50,000 and €40,000 respectively. Now, let’s compute their tax bands. Remember, income will be taxed with an interest rate of 20% and remaining income is taxed with an interest of %40
Spouse A Income:
€50,000 = €45,800 + €4,200
Spouse A Tax Bands:
€45,800 @ 20% = €9,160
€4,200 @ 40% = €1,680
Spouse B Income:
€40,000 = €27,800 + €12,200
Spouse B Tax Bands:
€27,800 @ 20% = €5,560
€12,200 @ 40% = €4,880
What Are Tax Credits? Can a Dublin Accountant Help Me?
There are two types of tax credits- the working tax credit and the child tax credit. The working tax credit is a refundable tax credit available to low-income earners. The child tax credit is a non-refundable tax credit available to families with children.
Tax credits can be extremely beneficial for low-income earners and families with children. If you are struggling to make ends meet, an accountant can help you determine if you are eligible for tax credits. An accountant can also help you maximise your tax credit benefits by ensuring that you claim all of the credits to which you are entitled.
What Is the Irish Emergency Tax?
Emergency tax is a system of taxation that allows the Irish Revenue Commissioners to collect taxes from people who have not paid enough in advance. This can happen if you start a new job, change your job, or receive a pay rise. If you have not paid enough tax, you will be liable for emergency tax.
What Are Tax Allowances?
Tax allowances are deductions that can be taken from your taxable income, effectively reducing the amount of tax you owe. The most common tax allowance is the standard deduction, a set amount everyone is entitled to deduct from their income. Other common tax allowances include deductions for charitable donations, mortgage interest, and property taxes. By taking advantage of these deductions, you can lower your overall tax bill.
A tax rebate can decrease your tax rates depending on where and how much tax you are charged. You are able to take a deduction from your earnings without being taxable.
Income is taken up and is taxable at a fixed or higher rate based on your income. If you can have tax reliefs in excess of €200 with a 20% tax rate, your tax allowance will be reduced by €200. You receive a €200 tax deduction.
If you are unsure whether you qualify for a particular tax deduction, it is always best to speak with a Dublin accountant or tax specialist. They can help you determine which deductions you’re eligible for and how to maximise your savings.
What Personal Expenses Are Allowable for Irish Tax?
There are several personal expenses that are allowable for Irish Tax. These include medical expenses, education expenses, and certain home expenses. For a complete list of allowable personal expenses, please visit the Irish Revenue website.
If you are a resident of Ireland, it is important that you file a tax return every year and declare your income. The Irish Taxation System is based on a self-assessment system, which means that the Revenue Commissioners will assess your return and send you a notice of assessment. If you are not sure what taxes you need to pay or would like help filing your tax return, get a trusted accountant to help you fulfil your obligation.
Need help with paying your taxes in Ireland? APM Accountants can take care of everything for you! Our accounting expertise and personalised services can save you time, money, and frustration with managing your finances. We will respond to your query within 3 hours. Call us now on 01 4418732 or email at info@apmaccountants.ie.
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