When do I need to file an Irish tax return?
You must file an Irish tax return if you are self-employed, chargeable person, open a foreign bank account, buy/ sell shares, invest in an off-shore fund, make a capital gain from the sale of an asset, receive rental income from both domestic and 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?
Irish tax residents fall under a self-assessment system of taxation with the onus of completing a tax return falling on the individual. 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 or who are deemed to be a chargeable person.
Self-employed individuals will complete a Form 11 tax return. 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 year or higher than €3,175 per month.
Company Directors who own more than 15% of a company will have to file a Form 11 even if the majority of their income comes from the PAYE system.
When is deadline for filing a Form 11 with Revenue?
October 31st is the deadline for filing a Form 11 tax return the following year after income was generated. November 15th is the deadline for online filing of the Form 11.
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 randomly select PAYE workers and issue Form 12’s for completion regardless of your income threshold.
People with income of up to €3,175 gross income or €50,000 per annum from non-PAYE sources can 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?
October 31st is the deadline for filing a Form 12 tax return the following year after income was generated. November 15th is the deadline for online filing of the Form 12.
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 form outside your PAYE system you are liable to file a tax return. Additional sources of income: rental (domestic & foreign) income, share dividends, capital gains from sale of assets, deposit interest from a foreign bank account, investments in off-shore funds etc.
What happens if I do not make a tax return?
Non tax compliance can lead to late filing penalties 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 etc.
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 2009
Up to €72,800(increase limited to the amount of the second income)
One parent family
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/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
- Will have their combined income assessed for Irish tax purposes.
- 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 before April 1st.
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:
- 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 tac year.
What is Separate Treatment for a
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:
- Have an obligation to file a personal Irish
- Is assessed on his/her own income.
- Is treated as a single person and therefore receives
the equivalent tax credits and rate bands as a single tax payer.
- Has no right to claim relief for payments
made by the other spouse.
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
countries point of view this is perfectly fine but there are two situations
here which should be noted:
when you include your foreign rental income with your annual resident tax
return there are often a number of deductions which are not deducted as each
tax system have their own rules and regulations concerning what are allowed as deductibles.
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 in-efficient tax method for declaring your
income as in addition to the above you will also be subject to your rate of
income tax which in many cases can be above 40% (UK) or 41% (IRE.)
while the above situation will meet your tax obligations in your resident
country you are not meeting your tax obligations in the overseas country which
leaves you exposed to fines, penalties and interest being imposed by the
foreign tax office.
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 sum is
achieved 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 DTA (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.