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In what circumstances will I need to file an Irish tax return?

You will have a filing requirement if you are in receipt of any non PAYE income. In addition, you must file an Irish tax return if you are self-employed, a chargeable person, open a foreign bank account during the year, acquire share options, invest in an off-shore fund, make a capital gain from the sale of an asset or receive rental income either domestic or international sources. How much you earn and from what sources will determine if you have to file a Form 11, Form 11E or Form 12.

Who should file a Form 11 tax return?

A Form 11 will be required for any individual who is deemed to be a chargeable person. Self-assessment customers are required to file Form 11 (or the shortened version Form 11E) which is mandatory for individuals with significant income from non PAYE sources.  

In general, most PAYE workers are not required to file a Form 11, but are required to do in certain circumstances where non-PAYE income received is more than €50,000 gross per annum or greater than €3,174 net per annum.

Company Directors who own more than 15% of a company (i.e. proprietary directors) will have to file a Form 11, even if the majority of their income comes from the PAYE system. You will also be regarded as a chargeable person if you open a foreign bank account, acquire a foreign life policy or a material interest in an offshore fund or exercise share options.

When is deadline for filing a Form 11 with Revenue?

The deadline is 31 October in the year following the tax year to which the return relates (i.e. for the tax year 2012, the return is due on 31 October 2013).  An extension is granted for online filing via Revenue's Online System (ROS). For 2012 returns, the deadline is 14 November 2013.

When do I need to file a Form 12 tax return?

A Form 12 tax return is completed by those whose primary source of income comes from PAYE income. In general most PAYE workers do not have to complete a Form 12 as they do not meet the criteria required to file a tax return.

 

Revenue may also randomly select PAYE workers and issue a Form 12 for completion regardless of your income threshold. 

 

People with income of up to €3,175 net income or €50,000 gross income per annum from non-PAYE sources should also complete a Form 12. If the non-PAYE income is above this amount, a Form 11 tax return will have to be submitted.

When is deadline for filing a Form 12 with Revenue?

The deadline is the same as the deadline for filing a Form 11. It is 31 October in the year following the tax year to which the return relates (i.e. for the tax year 2012, the return is due on 31 October 2013).  An extension is granted for online filing via Revenue's Online System (ROS). For 2012 returns, the deadline is 14 November 2013.

What is a chargeable person when completing an Irish tax return?

A person who is in receipt of income liable to tax under the PAYE system but who is also in receipt of gross non-PAYE income of €50,000 or more from other sources, such as trading, professional or rental income etc. but where this income has been reduced to nil or to a negligible amount because of deductions, losses, allowances and other reliefs, is regarded as a 'chargeable person'.

I have supplementary sources of income outside my PAYE income. Do I need to file an Irish tax return with Revenue?

Yes, if are in receipt of income from outside the PAYE system, you are liable to file a tax return. Additional sources of income may include rental income (both domestic and foreign), share dividends, capital gains from sale of assets, deposit interest from a foreign bank account, investments in off-shore funds or any such source not subject to PAYE.

What happens if I do not make a tax return?

Non tax compliance can lead to late filing penalties of either 5% or 10% and interest accruing on any outstanding tax liabilities. The severity of the penalty will depend on a number of factors, such as the amount of tax owed, the time delay between the tax return being submitted and the actual due date of submission.

I’m recently married and want to know when my Irish tax credits change?

When a couple first marries they continue to be taxed as two single individuals under the Irish tax system. If the tax paid by both individuals is higher at the end of the year than if they were taxed as a married couple, a tax refund will fall due. An Irish tax refund would occur in this instance where one spouse was on a different tax rate than the other and there were unused tax credits as a result of the new union. 

Tax rates and bands 2013

 

20%

41%

Single Person

€32,800

Balance

Married couple
One income

€41,800

Balance

Married couple
Two incomes

Up to €65,600(increase limited to the amount of the second income)

Balance

One parent family

€36,800

Balance

 

 

Are there different options on how a married couple can be taxed?

Yes, Revenue allows the following options for married couples under the Irish tax system:

 

  • Joint Assessment or Aggregation.
  • Separate Assessment.
  • Separate Treatment/Assessment as Single Individuals.

What is joint assessment/ aggregation for a married couple in Ireland?

The most common form of taxing married couples in Ireland is joint assessment and is generally the most beneficial financially for same. One spouse will assume the responsibility for the joint tax liability and is generally referred to as the assessable spouse. The other spouse is referred to as the non-assessable spouse.

 

The Assessable Spouse -

 

  1. Will have their combined income assessed for Irish tax purposes. 
  2. Receives standard tax rate banks and combined tax credits.

Is required to file a joint Irish tax return and include all details pertaining to the married couples combined income.

Does a married couple have to notify Revenue by a certain date after they get married?

Yes, the couple must elect to have themselves registered for joint assessment by 31 March in the year following their marriage.

Can a married couple split their tax credits?

Yes, the married couple can elect to have their reliefs and tax credits split between them, but it should be noted that employment expenses and PAYE tax credits are not eligible for transfer.

Will I get one tax credit certificate or will Revenue issue two separate certificates?

Revenue will issue two tax certificates to a married couple where both spouses are in employment.

Can a married couple continue to be taxed individually after they marry?

Yes, a married couple can choose to be taxed separately and file separate Irish tax returns if required. This is known as aggregation.

 

Under the aggregation method the following credits are divided between spouses:

  • Married
  • Age
  • Blind
  • Incapacitated Child

Where there are unused credits or standard rate bands (excluding the increase to the standard rate band) this can be transferred to the other spouse in the following tax year.

My accountant includes the rental income I receive from my overseas property in my resident tax return but I don’t file any return overseas. Is this ok?

This is a common situation that we are seeing more and more of lately. From your resident country's point of view this is perfectly fine but there are two situations here which should be noted -

 

Firstly, when you include your foreign rental income with your annual resident tax return, there are often a number of deductions which are not included as each tax system have their own rules and regulations. Unless the person preparing your resident return is familiar with the foreign tax system and speaks the language, they will not know what costs can be written-off. This is also the most inefficient tax method for declaring your income as, in addition to the above you will also be subject to income tax which in many cases can be above 40% (UK) or 41% (IRE.)

 

Secondly, while the above situation will meet your tax obligations in your resident country, you may not meet your tax obligations in the overseas country, which leaves you exposed to fines, penalties and interest being imposed by the foreign tax office. 

 

If you receive rental income abroad, your first obligation is to the tax authorities where the income was received. The main objective with any tax return is to reduce your taxable income by as much as possible. Once the taxable income is determined, tax is paid based on the income tax rate applicable to non-residents (if different than the resident income tax rate).

 

If a tax liability is due, a payment is made to the tax office. It is at this point that the Double Taxation Agreement (if available) would come into force which would ensure that you do not pay tax twice on the same income.

 

Declaring income in the overseas country first is the most Tax Efficient way of ensuring your taxes are in order.

What is Separate Treatment for a married couple?

Separate treatment or Single Treatment is not to confused with Separate Assessment. Under the separate treatment each spouse is considered an individual and are taxed under the same method as a single tax payer.

 

Under this method each spouse -

 

  1. Has an obligation to file a personal Irish tax return.
  2. Is assessed on his/her own income.
  3. Is treated as a single person and therefore receives the equivalent tax credits and rate bands as a single tax payer.  
  4. Has no right to claim relief for payments made by the other spouse.  

My landlord lives overseas. Are there any special requirements for me?

Rent paid to a non resident landlord is subject to specific guidelines. For more information click here.

 

Click on the relevant link below to learn more about your tax obligations in the country of purchase:

Canadian Property TaxCanadian Property TaxPolish Property TaxPolish Property Tax
French Property TaxFrench Property TaxPortuguese Property TaxPortuguese Property Tax
German Property TaxGerman Property TaxSpanish Property TaxSpanish Property Tax
Hungarian Property TaxHungarian Property TaxUK Property TaxUK Property Tax
Irish Property TaxIrish Property TaxUSA Property TaxUSA Property Tax

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