This one page guide to Irish taxation law is written by Liam Burns, a chartered tax adviser with the Irish Taxation Institute and Principal of Liam Burns and Co Accountants.
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Section 1: DIRECT TAXES
Direct taxes are those taxes that are collected directly by the government from an individual or business that the tax is imposed upon. Examples are Income Tax and Corporation Tax.
Tax Consolidation Act 1997 (TCA 1997)
Most individuals, depending on their residential status, that earn money in the state, whether that be as an employee, director or self-employed person, will be subject to Income Tax.
Employees are taxed at source by their employer and pay their taxes through the PAYE system. Self-employed persons and certain directors are required to file an income tax return each year stating their income and providing a self-assessment of their income tax due for the period. The tax year coincides with the calendar year and income tax returns (Form 11) are due to be filed the 31st of October in the year following the tax year.
Corporation Tax – Tax Consolidation Act 1997 (TCA 1997)
Companies, whether limited or unlimited, operating in the state may be subject to Irish Corporation Tax. The current rate of Tax is 12.5% for trading income and 25% on non-trading and investment income.
Section 2: CAPITAL TAXES
CAT – Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003)
Also known as Gift Tax an Inheritance Tax, this tax is imposed on individuals who inherit property, cash, real estate or otherwise. The current rate of tax is 33%. There are certain allowances depending the relation of the disponer to the beneficiary.
CAT will occur if either the beneficiary or disponer is tax resident in the state or if the property is situated in the state.
Tax Consolidation Act 1997 (TCA 1997) – Previously Capital Gains Tax Act 1975
Capital Gains Tax is payable by individuals and companies that make a gain on the sale of a chargeable asset. The current rate is 33% for both individuals and companies. The cost of the asset is deducted from the sales proceeds and the gain is liable to tax.
Typical chargeable assets include: All Property – land and buildings and shares, options, goodwill.
Non-chargeable assets include: Wasting Chattels i.e. private motor cars, livestock, and bloodstock.
Section 3: INDIRECT TAXES
Indirect Taxes are taxes that are generally linked to consumption, production and imports and are collect by an intermediary from the person that the tax is imposed on. Examples are VAT, carbon tax, customs and excise duties collected by retailers, service providers etc.
Value Added Tax Consolidation Act 2010 (VATCA 2010)
Value Added Tax is a tax imposed on the supply of goods and services provided from or within the state, except if an exempt activity.
Any person, business or company that is required to charge VAT is known as an accountable person.
The current VAT rates are 0%, 9%, 4.8%, 13.5% and 23%. The rate depends on the goods or services provided. For Example, VAT on professional services is generally 23%, while VAT on services such as construction is generally 13.5%.
Stamp Duties Consolidation Act 1999 (SDCA 1999)
Stamp Duty is a tax that is chargeable for the legal recognition of certain written documents. Generally the documents relate to a transfer of property, whether that is land, buildings, shares or otherwise.
The most common stamp duty is that on the transfer of residential property. The rate of stamp duty on residential property is 1% for consideration of up to €1,000,000 and 2% over €1,000,000.
Stamp duty rate for all other property (other than residential property) is 2%. [Update: The stamp duty rate for commercial property increased from 2% to 6% in Budget 2018 –
taking effect in late 2017].
Other items liable to stamp duty include debit and credit cards, and insurance policies (€1)
Customs and Excise (Miscellaneous) Act, 1988
C&E duties may be chargeable on goods imported into the state from businesses or individuals, depending on the type and value of the goods being imported.
Income Tax and Corporation Tax (Relevant Contracts Tax) (Amendment) Regulations 2013
RCT is a tax that is operated within the construction, forestry and meat processing industries. The tax is an amount withheld by the principal contractor from a subcontractor. The tax withheld is paid over to Revenue Commissioners and a credit is given on the subcontractors’ tax record for this amount.
The rates of RCT are 0%, 20% and 35%. The rate for subcontractors will depend on their tax history. If taxes are up to date and returns are generally filed and paid on time, then the rate will generally be 0%.
RCT is applied to both resident and non-resident subcontractors.
Vehicle Registration and Taxation (Amendment) Regulations
VRT is a tax imposed on all motor vehicles that are used in the state except those brought in for temporary use by visitors. All vehicles must be registered with Revenue Commissioners before they can be licensed.
The VRT rates depend on the CO2 emissions of the vehicle and is then calculated as a percentage of the retail value of the vehicle.
*I have an accountancy practice called Liam Burns & Co so if you wish to contact me please do so at (01)5677380
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