Paying tax to Revenue in Ireland is done online, through ROS for businesses and employers or myAccount for individuals. This guide starts with how to pay business taxes and which payment methods Revenue accepts, then covers who must register for income tax under self-assessment and the main exemptions.
Ireland operates a self-assessment tax system, which means individuals are responsible for determining their tax liability and filing their tax returns. In this blog post, we’ll discuss who should register for Personal income tax, current tax rate bands and opportunities to claim tax exemptions in Ireland.
Whether you’re an employee, a self-employed professional, or a business owner, understanding the Irish tax system is crucial. So, let’s dive in and learn more about income tax in Ireland.
Update as of October 2024. To register for Income Tax, proprietary directors – those who possess at least 15% of company shares – must submit their PPS numbers. If you don’t have PPSN, contact Chern & Co. Our expert team will help you obtain PPSN in Ireland.
How to Pay Business Taxes to Revenue
Revenue does not accept cash or cheques for most business taxes. Companies, sole traders and employers pay online, and the channel depends on who you are:
- ROS (Revenue Online Service): companies, the self-employed and employers file returns and pay Corporation Tax, VAT, PAYE for employees and preliminary tax through ROS. Payment is by ROS Debit Instruction from your bank account, by debit or credit card, or by direct debit for preliminary tax and some monthly liabilities.
- myAccount: PAYE employees and individuals who are not in business use myAccount to pay a balance, review their tax and claim credits.
- Direct debit: a monthly direct debit spreads preliminary tax or VAT over the year, so you do not face one large payment.
Most ROS payment deadlines fall on the 23rd day of the month: VAT for the previous two-month period, the employer’s monthly payroll payment, and Corporation Tax instalments. Individuals in self-assessment pay the balance for the previous year and preliminary tax for the current year by 31 October, with a later date in November if both the return and the payment are made through ROS.
If you cannot pay in full, ask Revenue for a phased payment arrangement through ROS or myAccount before the due date rather than missing the payment. For help registering and filing, see our income tax registration service and Form 11 filing service.
Who Should Register for Income Tax in Ireland
Income tax payment is based on a self-assessment system which means you’re responsible for calculating your own tax liability and paying it directly to the Revenue Commissioners. Individuals who fall under the following categories are required to register for the self-assessment system:
- Sole traders;
- Individuals who profit from share options or share incentives;
- Individuals whose main or only source of income is rental income, investment income, foreign income including foreign pensions, and maintenance payment.
You don’t have to register for self-assessment if you only have PAYE (pay-as-you-earn) income. It means that every time your salary is paid, your employer deducts Income Tax (IT), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) and pays the amount deducted to the Revenue.
*Please note that companies are obliged to pay tax on their income which is called Corporation Tax. If you’re an owner or employee of a company that pays corporation tax, it does not make you exempt from Personal income tax.
Irish Income Tax Thresholds and Rates
Income tax is charged at the standard rate of 20% up to a rate band and at the higher rate of 40% above it. The rate bands and tax credits depend on your personal circumstances, such as marital status and dependent children, and they change in each Budget. Check the current figures on Revenue’s tax rates, bands and reliefs page before you calculate your liability.
Income tax payment is accompanied by the submission of income tax return.
*All types of income fall under the category of “active” or either “passive” income. Active income is money you make from actively participating in work, whether you are salaried or paid hourly, employed or run your own business, earn commissions, bonuses or tips, and so on.
Passive income is money received without active involvement. These are monies you earn in the form of dividends, rental activity, cash-back from credit or debit card, affiliate marketing and ads, and licensing intellectual property.
Exemptions from Personal Income Tax in Ireland
Under certain personal circumstances such as marital status age, and the number of dependent children, individuals in Ireland may claim income tax exemptions. There are certain conditions that allow you to claim PIT relief:
- You are a single or widowed person whose total income is less than the exemption limit of €18,000
- You are married or in civil partnership and jointly assessed and your total income is less than the exemption limit of €36,000
- Either you or your partner is 65 and older.
If you have dependent children, your exemption limits are increased.
To Sum Up: Income Tax in Ireland Made Easy
In this post, we navigate you through the key aspects of the Irish tax system aimed at making it align with your questions. Irish income tax is an integral element of the Irish taxation system and is based on self-assessment model. Individuals living and working in Ireland are responsible for determining their tax liability and filing their tax returns. While only individuals who reach certain income thresholds are chargeable for income tax, there are exemptions available based on personal circumstances. It’s important to note that companies paying corporation tax do not exempt individuals from paying personal income tax. Therefore, individuals must ensure they understand the Irish income tax system and comply with their tax obligations.
Chern & Co is on the mission of making businesses easy for entrepreneurs. We provide our customers with professional assistance in the preparation and filing of income tax returns. Share your tax fears and needs with us. Contact Chern & Co and we will take care of your Income tax compliance.
Disclaimer: The content of this page is for acquainting purposes only and is subject to change. It does not constitute any professional advice. No liability is accepted by Chern & Co for any actions taken or not taken in reliance on the information set out in this article. Professional, legal or tax advice should be obtained before taking or refraining from any action
