INDIVIDUAL TAXES
GENERAL NOTE
The information in this entry is current as of January 1998. For subsequent developments consult the contact listed above.
TERRITORIALITY AND RESIDENCE
Irish income tax is imposed on the following.
1. The worldwide income of an individual resident and domiciled in Ireland.
2. Income arising in Ireland and the United Kingdom and foreign income Remitted to Ireland of an individual resident but not domiciled in Ireland.
3. Income arising in Ireland of an individual not resident in Ireland.
The following two rules determine the tax residence position of an individual.
1. An individual who spends 183 days in Ireland during a tax year is resident for that year.
2. An individual who spends 280 days in aggregate in Ireland between that year and the preceding year will be resident in that year, provided more than 30 days are spent in Ireland an each year.
GROSS INCOME
Employee gross income/Expatriate employees will generally be regarded as resident but not domiciled in Ireland. Such individuals will be liable to Irish tax on that portion of their foreign salary that they remit to Ireland, together with any benefits-in-kind(such as a house or car) or allowances that are provided to them by their foreign employer. The
remittance basis does not apply to income from the United Kingdom. If, in addition, the individuals are in receipt of salary, benefits of allowances from an Irish-affiliated company, these items are fully taxable.
Capital gains and investment income/A single rate of 20% applies to most capital gains,(excluding gains on the disposal of development land, certain interests in offshore funds and foreign life insurance policies where the rate of 40% applies) with effect from December 31,1997. In computing capital gains, the base cost is indexed by reference to the level of Irish inflation during the period of ownership. Annual gains of
up to IR￡1,000 for an individual are exempt form capital gains tax. This exemption is not transferable between spouses.
A nondomiciled Irish resident is liable to Irish capital gains tax on the full amount of gains arising in Ireland or the United Kingdom and on that portion of foreign gains the is remitted to Ireland.
Income tax on interest paid on normal deposit accounts held by Irish resident individuals in banks and other financial institutions in confined to a total of 24% and is deducted at source. Nonresident individuals who make a relevant declaration can receive deposit interest gross.
Furthermore, certain tax-efficient special savings/investment accounts are available to individuals. Individuals may invest up to a maximum of IR￡50,000(IR￡100,000 for a married couple) in such accounts. The total tax liability on special savings accounts is limited to 20% of the return. For special nvestment accounts, it is limited to 10% of the return.
Investment income of a nondomiciled person arising outside Ireland and the United Kingdom is taxed only to the extent that it is remitted to Ireland.
DEDUCTIONS
Business deductions/Individuals may claim a deduction for expenses incurred wholly, exclusively and necessarily in the course of their employment. These expenses would include travel costs when the employment requires absence from home, as well as reasonable maintenance expenses for such absences. Expenses incurred traveling to and from work are not deductible. There are no standard deductions.
An Irish resident individual may, in certain circumstances, obtain a deduction from taxable employment income for periods of at least 90 days in aggregate spent working outside Ireland and the United Kingdom in a 12-month period.(Only periods of at least 14 consecutive days count for purposes of this deductions.
Nonbusiness expenses/The more important nonbusiness expenses that may be deducted are mortgage interest, interest(usually referred to as ＂protected interest＂)on loans for investments in certain private trading or rental companies, medical insurance, and retirement annuity premiums for self-employed or nonpensionable earnings. There are no standard deductions. No deduction is allowed for taxes or charitable donations.
In the case of mortgage interest, in general a deduction of 80% of the interest paid on a loan for the purchase, improvement or repair of the individual's principal private residence is allowed. The maximum deduction in the case of a married couple for 1998/99 if IR￡3,800 and this is only available at the standard rate of income tax (currently 24%). There are slightly higher allowances for first-time buyers.
Personal allowances/Personal allowances are allowable as a deduction in determining taxable income. For 1998/99 the main personal allowances are IR￡3,150(single), IR￡6,300(married) and IR￡3,650(widowed). An increased allowance of IR￡6,300 is granted to an individual
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