Rental income from residential property in the Republic of Ireland is subject to tax, regardless of whether or not the owner is resident in Ireland. Owners of rental property in Ireland who are in receipt of rental income are obliged to declare this income by submitting an annual tax return to the Revenue Commissioners of Ireland.
Rental income is calculated on the basis of the gross amount of rent received with profits and losses calculated separately for each rental source. The rental income subject to tax is the aggregate of the profits reduced by the aggregate of the losses.
Rental income from property situated outside the Republic of Ireland is subject to tax for individuals who are resident and domiciled in Ireland, although double taxation treaty relief may be applicable.
When rent is paid directly to a non-resident landlord, the tenant is obliged to deduct income tax at the standard rate from the payment. The tenant then gives the landlord a certificate of the tax deducted on Form R185.
Where the rent is paid to an estate agent, a management company, a solicitor, or someone who is nominated to act on behalf of a non-resident landlord in the collection of rent, the “collection agent” is not entitled to deduct tax from the rent and should not issue a Form R185 to the landlord.
The landlord is entitled to claim relief for expenses which are usually allowed in arriving at the rental profit, and may be entitled to a proportion of personal allowances. Your dedicated PTI Account Manager can go through the full Revenue obligations with you.
Purchasing an Irish Residential Property
If you’re buying residential property in Ireland there are two types of tax you need to be aware of:
Stamp duty is a type of tax that is charged when purchasing property. For properties with a value of up to €1 million, the rate is 1% with the balance at a rate of 2%.
VAT is payable in Ireland @ 13.5% on new builds. There is no VAT payable on second-hand residential properties in Ireland. It is advisable to seek professional VAT advice in this respect.
Local charges apply for services such as refuse collection and water. These are set by the Local Council / Corporation and vary according to the location.
Local Property Tax
Property tax is based on the value of the residential property. New properties are exempt from this.
Irish Tax Services
As a registered tax agent with the Revenue Commissioners of Ireland, Property Tax International can provide a comprehensive list of services for both residents and non-residents in Ireland.
Our Kilkenny and Dublin-based teams of Irish tax specialists are available throughout the process to answer any questions you have about your Irish tax return. PTI provides:
- Irish PAYE Income Tax Returns
- Irish Self-Assessment Income Tax Returns
- Irish Capital Gains Tax services
- Irish Foreign rental figure conversion
- Irish Preliminary Tax Calculation
- Irish Capital Acquisition Tax services
When you register with PTI, we’ll provide you with a dedicated Account Manager to organise all the services that you require.
- In what circumstances do I need to file an Irish tax return?
- You will have a filing requirement if you are in receipt of any income that falls outside the PAYE system, for example rental income from either domestic or international sources. In addition, you must file an Irish tax return if you:
- Are self employed
- Are a chargeable person*
- Are a proprietary director with more than 15% of company’s shareholding
- Open a foreign bank account during the year
- Exercise share options
- Acquire shares under Revenue approved share participation scheme
- Invest in an off-shore fund
- Make capital gain from the sale of an asset
- Receive an inheritance or gift and use more than 80% of your lifetime group threshold
The amount you earn and from what sources will determine if you have to file a Form 11, Form 12, Form CG1 or Form IT38.
*A chargeable person is someone who is in receipt of income liable to tax under PAYE system and is also in receipt of gross non-PAYE income of €30,000 or more from other sources, such as trading or rental income etc.
Even your gross income is less than €50,000 you also will be regarded as chargeable person if you net income (after deduction and allowances) is more than €5,000 net. Also note that if your gross income has been reduced to nil or to a negligible amount because of deductions, losses, allowances and other reliefs you will be still regarded as a chargeable person.
- 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 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 the non-PAYE income received is more than €30,000 gross per annum or greater than €5,000 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 have a material interest in an offshore fund or exercise share options.
- When is the deadline for filing a Form 11 with Revenue?
- The deadline is October 31st in the year following the tax year to which the return relates (i.e. for the 2019 tax year, the return is due on 31 October 2020). An extension of approximately two weeks is granted for online filing via Revenue’s Online System (ROS).
- 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 their income threshold.
People with income of up to €5,000 net income and €30,000 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 the deadline for filing a Form 12 with Revenue?
- Form 12 has the same deadline as the Form 11 (31st October in the year following the tax year to which the return relates).
- I have supplementary sources of income outside my PAYE income. Do I need to file an Irish tax return with Revenue?
- Yes, if you are in receipt of income from outside the PAYE system, you are legally obliged 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 of income not subject to PAYE tax.
- What happens if I do not make a tax return?
- Failing to comply with tax laws 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 be 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.
- Are there different options on how a married couple can be taxed in Ireland?
- 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. One spouse will assume 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 couple’s 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 31st March in the year following their marriage.
- Can a married couple split their tax credits?
- Yes, the married couple can elect to have their tax relief 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 ‘separate assessment’.
Under the this method following credits are equally divided between spouses:
- Married Personal tax credit
- Age tax credit
- Blind tax credit
- Incapacitated Child tax credit
Where there are unused credits or standard rate bands (other than the Employee tax credit and Employment expenses or 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 on 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 has its 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%.
- 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 can leave you exposed to the possibility of 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. PTI can provide more advice on this if you’re unsure of your obligations. We can help you stay tax compliant across multiple jurisdictions.
- What is Separate Treatment for a married couple?
- Separate treatment or Single Treatment is not to be confused with Separate Assessment. Under 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:
- Has an obligation to file a personal Irish tax return.
- 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 landlord lives overseas. Are there any special requirements for me?
- Rent paid to a non-resident landlord is subject to specific guidelines. Your PTI Account Manager can provide you with more information on your obligations.
Tax Rates and Deadlines
Irish Tax Return Fees
Our packages are priced according to the complexity of your affairs and start at just €239. In order to cater for all levels of complexity and ensure transparency from the start, we have devised the following fee structure:
Basic Tax Return preparation – €239
The basic tax return includes:
- Employment income (1 P60)
- Claim for Rent-a-room relief
- Non-resident Landlord (1 property)
- Dividend income (1-3 shareholdings)
Additional fees apply for the following items:
- Filing of tax return on the Revenue Online Service or by Paper – €25
- Tax Registration/Deregistration or Collection Agent Registration – €50
- Irish employment/ pension/ Social Welfare payment (per additional source) – €20
- Foreign employment/pension (per additional employment) – €50
- Self-employment income:
– Where income & expense statement is provided – €50
– Where receipts are provided in order to prepare the income and expense statement – €100*
– Where RCTDC certs are to be submitted to the Revenue Commissioners (per submission) – €50
- Rental property (per property) – €50
- Bank interest (1-5 accounts) – €50**
- Dividend income:
– 4 – 6 shareholdings – €50
– 6 + shareholdings – €100
- Company director – €50
- Reporting of exempt income – €50
- Capital Gains Tax:
– Shares (per disposal) – €75***
– Irish residential property (per disposal) – €150
– Foreign residential property (per disposal) – €200
– Irish/foreign commercial property (per disposal) – Price on review
- Share schemes (per transaction) – €50****
- Calculation of foreign tax credit – €50
- Claims for reliefs:
– BES/Film investment relief – €75
– Medical, rent – €10 – €75*****
- Preliminary tax calculation (current year assessment) – €50
- Consultancy Service (per hour) – €200. Qualified tax consultants can provide advice and planning under our consultancy service. Fee estimate will be provided in advance of any advice given.
- Tax Clearance Certificate Application – €50
The above fees are VAT inclusive.
* Starting fee is subject to volume of work involved. Applies to processing receipts and invoices for self-employed individuals such as sub-contractors and farmers.
** If there are more than 5 accounts an additional charge will apply.
*** If complex share history an additional charge will apply.
**** Strictly applied where clear documents have been provided and no calculation is needed to arrive at taxable position.
***** Reduce to 10% of value of reliefs claimed subject to above min and max.