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Investment Taxation for Expats in Ireland

Submitted: October 2014

Taxable income in this category includes:

 

Interest

For residents, interest income from Irish sources is subject to Deposit Interest Retention Tax (DIRT) at a rate of 41% on all interest payments from banks and other financial institutions.

For non-residents, interest income from Irish sources is also subject to Deposit Interest Retention Tax (DIRT) of 41% on all interest payments from banks and other financial institutions, unless the non-resident contacts the financial institution, and puts in place an exemption from DIRT by completing a declaration of non-residence. Non-residents, who have had DIRT deducted, can reclaim the tax paid up to four years after the year in which the interest was paid by completing Form IC5; the form is available for downloading on this page.

Other forms of interest are subject to income tax at progressive rates.

 

Rental income

For residents, rental income worldwide is taxed as ordinary income, and must be reported on the annual return. Taxable income is calculated after the deduction of certain costs, including management charges, agency fees, repairs and other costs. Interest on funds borrowed to purchase (mortgages), repair or improve residential properties is also deductible. Only 75% of the interest on funds borrowed for the purchase of the property is deductible. If you are a resident receiving rental income from a country outside Ireland, you should be able to offset tax paid abroad against your Irish tax liability. For non-residents, only rental income that is from an Irish source is taxable.

Expats should be aware that if you are a tenant in a property owned by a non-resident, and you are paying rent directly to the landlord, you must deduct Irish tax at the standard rate (20%) from your rental payments and send it to the Irish Tax Department.

 

Dividends

For residents, dividends are subject to a withholding tax which is charged at the standard rate (20%). The dividend amount and the withholding tax paid must be itemised on your tax return. The withheld tax acts as a tax credit against your final tax liability. The final taxable amount will depend on the resident’s marginal rate of tax. Exemption from the withholding tax applies in certain circumstances, for example dividends paid to resident Irish companies and some pension funds.

For non-residents, dividends are subject to a withholding tax which is charged at 20%. Individual residents of other EU member states or countries with a suitable tax treaty in place can apply for a withholding tax exemption.

 

Capital gains

For residents and non-residents, capital gains are generally taxed at a flat rate of 33%. Non-residents are only taxable on capital gains from certain Irish assets, including land, minerals (and mining related rights or interest) and assets associated with a trade. Indexation only applies to the period an asset was held prior to 31 December 2002. The sale of certain assets is subject to tax deducted at source, if the consideration is greater than €500,000.

For property in Ireland purchased between 7 December 2011 and 31 December 2014, no capital gains tax is payable on any gain accruing over the first seven years of ownership, provided the property is held for at least seven years and was originally purchased at market value (or at least 75% of market value if acquired from a relative).

 

 

 




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