Tax management is entrusted to the government agency Revenue Commissioners.

Taxation of individuals
The income of individuals is subject to income tax and the separate capital gains tax. The regulation of both taxes is contained in the Taxes Consolidation Act of 1997 (TCA 1997). Resident individuals are taxed on their income wherever they arise (worldwide taxation principle), while non-resident individuals are taxed only on Irish sources of income. A natural person is considered to be a resident if he or she remains in Irish territory for at least 183 days in a 12 month period, or for at least 280 days taking into account the current and previous year. Individuals residing in Ireland for three consecutive years also acquire habitual resident status. Taxable income includes income from employment or self-employment, income from land and income from capital; in particular, employment income includes all income deriving from the exercise of an activity (salaries, wages , fees, overtime, bonuses, commissions, allowances).

In terms of taxation, there are basically 2 brackets: 20% and 40% (higher rate). The tax rate is 20% for income up to € 35,300, while it rises to 40% for the bracket that exceeds € 35,300. For married couples, the threshold for applying 40% is raised to € 44,300 in the case of a single income, while it reaches € 70,600 in the case of two incomes.

 

Status  2021                                                  rate 20%          rate 40%

 

Single person with no dependent child      Up to 35.300     over  35.300

Married couple with one income                 Up to 44.300    over  44.300

Married couple with two incomes               Up to 70.600     over  70.600
 

The 2019 Budget Law, in order to lighten the tax burdens of taxpayers with medium-low incomes, increased the entry threshold to the higher rate of income tax by 750 euros, bringing it from € 34,550 to € 35,300 in the case of a single worker and from € 43,550 to € 44,300 in the case of couples with only one income.

There is an exemption from income tax for individuals aged 65 or over with an annual income of less than 18,000 euros; even a married couple with an income of less than € 36,000 per year is exempt if one of the spouses is at least 65 years old or turns it during the year.

There are some tax credits, some determined automatically, others must be requested by taxpayers. The main tax credit currently amounts to € 1,650 per year for a single person and € 3,300 per year for a married couple. There is an exemption for income of up to 40,000 euros produced by artists, writers and composers, as well as for those of businesses started by long-term unemployed.

Some items of expenditure can be deducted from income: medical expenses (such as medicines, hospital costs, expenses for nursing homes, special foods for diabetics and celiacs, travel expenses for patients on dialysis), a share of university fees (courses must have a duration of at least two years, with the exception of postgraduate courses which must have a duration of at least one year), contributions paid to a pension scheme.

The Universal Social Charge (USC) is an additional income tax applicable to anyone whose income exceeds the statutory exemption threshold of € 13,000. The rates are 0.5% for the income bracket up to 12,012 euros, 2% for the bracket ranging from 12,012 euros to 19,874 euros, 4.5% for those between 19,874 and 70,044 euros, and 8% for the of income exceeding € 70,044:

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Income level      

€ 0 - € 12.0120             5%

€ 12,012 - € 19,874      2%

€ 19,874 - € 70,044      5%

Over € 70.044              8%

With a view to favoring medium-low incomes, the 2019 Budget Law raised the threshold of the second bracket up to € 19,874 (up to 2018 the threshold was € 19,372). Furthermore, again with the 2019 budget law, for incomes between 19,874 and 70,044 euros, the rate has gone from 4.75% to 4.5%.

Social contributions

Social wage insurance (PRSI)
The PRSI is charged on employee income, including taxable non-monetary benefits. Individuals who earn less than € 352 in a week are not required to pay the PRSI for that week.

PRSI contributions also apply to income from commercial or professional activity and income from capital. The minimum contribution to be paid is 500 euros. The payment must be included in the tax advances  (preliminary tax), which must be paid by October 31 of each year.

The contribution paid by the employer is 11.05%, while that paid by the employee is 4.00%.

Self-employed workers whose income from any source is less than € 5,000 for 2021 are not subject to the PRSI. The PRSI contribution rate for self-employed workers is 4%, in line with the rate applicable to employees.

Taxation of legal persons
Irish resident companies are taxable in Ireland on profits generated wherever they are. Non-resident companies are subject to corporation tax only on commercial profits produced in Ireland by their Irish branch or agency. The Irish tax year coincides with the statutory year.

Trading income is discounted at a proportional rate of 12.5%. Non-commercial income, as well as income deriving from the carrying out of mining, quarrying, oil or real estate activities, on the other hand, are subject to a rate of 25%. To benefit from the 12.5% rate, companies must carry out commercial activities in Irish territory. Capital gains realized through commercial exchanges made outside the Irish territory are subject to the rate of 25%.

The concept of trading income is not defined, but the commonly accepted meaning is that of income from any trading and production activity. Managerial activities (legal, financial, accounting, etc.), financial activities (banking, financial management, insurance activities, etc.), electronic commerce, technical support activities, research or development activities, distribution activities are all commercial activities that together with the more traditional manufacturing activities, if conducted in Ireland and appropriately structured, they can be subject to the ordinary rate of 12.5%.

The expenses that can be deducted from the taxable income are those incurred entirely and exclusively for the purposes of the activity carried out. In particular, entertainment expenses are not deductible; expenses for research and development and payments for the acquisition of know-how in general are eligible deductions, as are the costs of obtaining or extending patents and obtaining and renewing trademarks.

Businesses are entitled to a deduction, as a business expense, for qualifying donations to charities, educational institutions, schools, churches, research foundations, sports organizations, and other approved organizations that meet certain conditions. To qualify for a tax deduction, the donation must amount at least to 250 euros.
The rules on transfer pricing are aligned with the guidelines dictated on the subject by the Organization for Economic Cooperation and Development (OECD).
The capital gains tax is applied to the positive differences between the value of the shares acquired and the value of the same shares at the time of sale. The general capital gains tax rate is 33%. Some capital gains are discounted at a rate of 40%. The tax is applied to the capital gain that exceeds the deductible of 1,270 euros.
 
Value Added Tax - VAT
The value added tax is imposed on the transfers of goods and on the provision of services provided by companies as part of their activity. As of January 1, 2012, the ordinary rate is 23%.
Reduced rates are also envisaged: a rate of 13.5% applies, for example, to construction services, some pharmaceutical products, child car seats, renovation and repair of private homes, some agricultural supplies, collection of household waste, supply of natural gas, electricity and district heating, health study services, tourist services, photographic services, works of art and antiques, services provided by veterinarians, admission to amusement parks); a 9% rate applies to other types of goods and services, such as certain supplies in the tourism sector, newspapers and periodicals, admission to cultural events, use of sports facilities, hairdressers, e-books and digital publications, admissions to cinemas, theaters, museums, sports facilities.
Finally, a rate of 4.8% is envisaged for livestock destined for the preparation of food products and for some agricultural supplies.

Home contribution (Domicile Levy)
Since 2010, a fixed contribution on wealth of 200,000 euros has been introduced for persons domiciled in Ireland who have a total taxable income exceeding 1 million euros and who own Irish assets (excluding shares in Irish companies) of value equal to 5 million euros. The contribution is not due if the income taxes owed by the subject exceed € 200,000.

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Capital acquisitions tax
Includes gift and inheritance tax. Taxation is applied to the extent of 33% of the assets subject to donations and inheritance successions.

Deposit interest retention tax (DIRT)
This is the bank's withholding tax on interest paid or credited on deposits by Irish residents. In 2019, withholding tax was 35% (it was 37% in 2018, 39% in 2017, 41% in 2016, 2015 and 2014 and 33% for 2013).

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Excise duties
Excise duties are charged on mineral oils (including gasoline and diesel, hydrocarbon oil, liquefied petroleum gas), alcoholic products (including spirits, beer, wine, cider produced in Ireland or imported into Ireland) and tobacco products (including cigars , cigarettes, pressed tobacco, pipe tobacco and other smoking or chewing tobaccos).

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The stamp duty
Stamp duty is charged on the transfer of residential properties, non-residential properties and on long-term lease agreements, as well as on transfers of company shares, bank checks, cards (debit and credit cards, insurance policies).

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Duties
Goods imported into Ireland from countries outside the European Union are subject to customs duties ranging from 0% to 14% for industrial products, with much higher rates applicable to agricultural products.

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Declarations, instrumental obligations
In relation to personal income taxes, the taxation system differs according to whether the income derives from employment or self-employment. Employees are subject to the "PAYE" system, acronym for Pay As You Earn, or "pay when you earn". On the other hand, the self-settlement system is applied to self-employed workers. Individuals whose taxable income is entirely subject to the PAYE system are not required to submit a tax return. As of January 1, 2019, employers are required to report their employees' wages and deductions to revenue at or before payment.
The "pay when you earn" system (PAYE system) requires employers to make deductions at source of income tax, universal social tax (USC) and social insurance related to wages (PRSI) from payments made to employees and the obligation to remit such deductions to the Irish tax authorities.