Taxes in Ireland

Who counts as an Irish tax resident

The Irish tax year is the calendar year, 1 January to 31 December. Residence is decided mechanically, by counting days, not by where your family, your home or your main business happens to be.

You are resident if either test is met:

• 183 days or more in Ireland during the tax year;
• 280 days or more across the current and the previous year combined, provided each of those years has at least 30 days. A year with 30 days or fewer is left out of the count entirely.

A day of presence is any day on which you were in the country for even part of it - an overnight stay is not required. Landing in the evening and flying out the next morning gives you two days, not one. This rule has applied since 2009 and catches people who still plan trips by counting nights.

The concept of a centre of vital interests does not exist in Irish domestic law at all. It appears only in Article 4 of double tax treaties, where two countries both claim you: the tie is then broken by permanent home, centre of vital interests, habitual abode and finally nationality.

Two further statuses sit alongside ordinary residence, and confusing them is expensive:

• Ordinarily resident - acquired automatically after three consecutive years of residence and retained for a further three years after you leave. During those three years Ireland continues to tax foreign income above €3,810 a year, other than income from a trade or employment carried out wholly outside the country.
• Domicile - not residence at all, but the country a person treats as a permanent home. Domicile is inherited from a parent at birth and is very hard to change to Irish. Whether or not you have an Irish domicile is what opens the door to the remittance basis.

Moving mid-year. By default residence applies to the whole calendar year, even if you arrived in November. Split-year relief softens this: on a claim, employment income earned before the date of arrival or after the date of departure is taken out of the Irish base. The relief covers employment income only - rent, dividends and interest for the same period do not qualify. For how the day count works elsewhere, see our piece on tax residence and the 183-day rule.

Income tax: rates, bands and credits in 2026

The scale has only two steps: 20% on income within the standard rate band and 40% on everything above it. The size of the band depends on your family situation. Budget 2026 indexed neither the bands nor the credits - with wages rising, that is a quiet increase in the burden.

There is no tax-free allowance in the usual sense. Its role is played by tax credits, which are deducted not from income but from the tax already calculated. The main 2026 figures:

• personal credit - €2,000 for a single person, €4,000 for a married couple;
• employee (PAYE) credit, or earned income credit for the self-employed and proprietary directors - €2,000; the two together cannot exceed €2,000;
• single person child carer credit - €1,900;
• home carer credit - €1,950;
• incapacitated child credit - €3,800;
• the rent tax credit is extended to 2026-2028 with unchanged conditions and value.

What this means in practice: a single employee with two €2,000 credits starts paying income tax at roughly €20,000 of annual income (€4,000 divided by 20%). Below that there is no income tax - but USC and PRSI can already apply.

People aged 65 and over have their own rule: no income tax at all up to €18,000 (single) or €36,000 (married), and where income slightly exceeds the limit, marginal relief charges 40% on the excess if that produces a lower bill.

There are no local or municipal surcharges on income in Ireland - counties and cities have no power to tax income. The only tax that varies by location is the Local Property Tax, where a local council can move the base rate by up to 15% in either direction.

USC and PRSI: the two charges that turn 40% into 52%

A separate line on every Irish payslip is the Universal Social Charge. It is not a social contribution but an additional tax on income, introduced in 2011 as a temporary crisis measure and permanent ever since. USC is charged on almost gross income: pension contributions do not reduce it.

If total income for the year does not exceed €13,000, no USC is due at all. But the threshold is all or nothing: at €13,001 the charge applies to the whole amount from the first euro. Full medical card holders under 70, and everyone aged 70 or over, pay a maximum USC rate of 2% while income stays at or below €60,000.

The actual social contribution is PRSI. It is a single, by European standards modest charge, but it has been rising every year since 2024 as the state closes a gap in the pension fund. The next increase falls on 1 October 2026.

The lower employer rate applies where weekly pay is below a set threshold; that threshold is revisited in each budget, so confirm its level at the date of the payroll run. PRSI has no earnings ceiling: it is paid on the whole income, however large - which is where Ireland differs from Germany or Spain. No employee PRSI is deducted on weekly pay up to €352, and a tapered credit smooths the step just above it. The self-employed pay Class S on income from €5,000 a year, with a minimum annual contribution of €650 even in a loss-making year.

Adding the three components gives a marginal rate of about 52% for an employee and about 55% for a self-employed person earning above €100,000. That is among the highest marginal rates in Europe, and it arrives early: 40% starts at €44,000, roughly one and a half times the average wage. See how that compares with neighbours in our European tax comparison.

What a non-resident pays

A non-resident is taxed only on Irish-source income. Worldwide income is of no interest to Ireland - there are no returns to file on foreign accounts or assets.

• Salary for work physically carried out in Ireland - the ordinary 20/40 scale plus USC and PRSI, collected through PAYE. Work performed outside the country for an Irish employer is not within the Irish charge.
• Rent from Irish property - a tenant paying the landlord directly must withhold 20% and file a Rental Notification with Revenue. The alternative is to appoint a collection agent, in which case the tenant withholds nothing. The deduction is not final: the non-resident files a Form 11, computes the tax on the ordinary scale after expenses and mortgage interest, and credits the 20% already withheld. USC and PRSI do not apply to a non-resident's rental income.
• Dividends from Irish companies - dividend withholding tax of 25%. Exemption is available to residents of the EEA and of treaty countries who file the relevant declaration.
• Interest and royalties - a headline 20% withholding with a wide list of exemptions: treaties, EU directives, quoted eurobonds, and payments to companies in treaty territories.
• Capital gains - only on Irish land and buildings, mineral rights, and shares deriving their value mainly from Irish real estate. A non-resident selling ordinary shares in an Irish company is outside Irish CGT. Above a set consideration the purchaser must withhold 15% of the price unless the seller produces a CG50A clearance certificate.

Tax credits are given to non-residents only in part: the full set goes to residents of EEA and treaty countries whose income is substantially all Irish. Otherwise credits are apportioned by the share of Irish income in worldwide income.

One point is regularly missed: directors' remuneration. Pay for holding office as a director of an Irish company is Irish-source income regardless of where the director lives or physically works. That is a separate line in the calculations of anyone who incorporates in Dublin while sitting elsewhere.

Corporation tax: 12.5% and everything around it

12.5% is the most quoted number in the Irish system and the most widely misunderstood. It applies only to trading income - active business genuinely carried on from Ireland. Everything else goes at 25%.

Company residence. A company incorporated in Ireland on or after 1 January 2015 is automatically an Irish tax resident, unless a treaty allocates it elsewhere. A foreign-incorporated company becomes Irish resident if its central management and control sit in Ireland, meaning strategic decisions are actually taken here. Formal board meetings in Dublin are not enough to prove the opposite: Revenue looks at who really decides, and where.

Reliefs for smaller businesses.

• Start-up exemption (section 486C) - new trading companies that begin to trade before the end of 2026 pay no corporation tax for three years where the annual liability is €40,000 or less, with marginal relief between €40,000 and €60,000. The relief is capped by employer PRSI paid for staff, and since 2025 Class S contributions paid by owner-directors count too.
• R&D credit - increased from 30% to 35% of qualifying expenditure for 2026, payable in cash where there is no profit; the first-year payable instalment rises from €75,000 to €87,500.
• Participation exemption - since 2025 dividends from subsidiaries in the EEA and treaty countries are fully exempt where the holding is at least 5% and has been held for 12 months. From 2026 the geographic scope is wider and the residence look-back on the paying company is cut from five years to three.
• KEEP - the favourable share option regime for employees of small companies, extended to the end of 2028.

Withholding on payments out of Ireland.

One trap for a small consulting company is the close company surcharge. Where a company is controlled by five or fewer participators and does not distribute profits within 18 months of the end of the accounting period, an extra 20% is charged on undistributed investment and rental income and 15% on half of undistributed professional services income, with a €2,000 de minimis. It is this surcharge that makes the simple idea of paying 12.5% and leaving the money in the company work far less well than it looks on paper. Practical steps for setting up a structure are in our company registration section.

VAT: rates and the registration threshold

The standard Irish VAT rate is 23%, one of the highest in the European Union. There are several reduced rates, and 2026 brings a notable change to them.

An important detail: the July 2026 cut to 9% does not extend to hotels or short-term accommodation, which stay at 13.5%. Alcohol, soft and sports drinks, bottled water and vegetable juices served in a restaurant also stay at 23%, so a single bill can carry two rates.

Registration thresholds: €85,000 of annual turnover for supplies of goods and €42,500 for services. The thresholds run over any rolling twelve months rather than the calendar year, and registration is compulsory once they are exceeded or are reasonably expected to be. A non-established business making taxable supplies in Ireland registers with no threshold at all - from the first transaction. Voluntary registration below the threshold is possible and makes sense when your customers are VAT-registered and you carry input VAT.

Returns are filed bi-monthly by default, by the 23rd of the month following the period, through ROS. Revenue allows quarterly, half-yearly or annual cycles for smaller traders. An annual Return of Trading Details is filed separately, and cross-border trade adds VIES returns and, above statistical thresholds, Intrastat.

Taxes on capital: gains, dividends, property and inheritance

This is where Ireland is expensive, and it is the main thing to understand before moving with a portfolio. Its capital rates are higher than in most EU neighbours, and there is no relief for length of ownership.

Gifts and inheritances. The tax is paid by the recipient, not by the estate, and it is cumulative: lifetime thresholds aggregate everything received since 5 December 1991.

Transfers between spouses and civil partners are fully exempt. For non-residents the rule is simple: CAT arises if the deceased or the recipient is Irish resident, or if the property itself is in Ireland. The €20,000 Group C threshold is where unmarried couples in Ireland meet 33% on effectively the whole amount.

The eight-year rule. The least pleasant feature of the Irish system for a private investor is deemed disposal. Even if you have sold nothing, every eight years of holding a fund or ETF is treated as a sale, and 38% on the paper gain has to be paid in real money. Losses on funds cannot be set against gains on other funds or on shares. Anyone arriving in Ireland with an ETF portfolio should model this in advance - restructuring before residence begins is sometimes the cheaper route.

Regimes for new arrivals: non-dom, SARP and what is not a relief

Ireland offers newcomers no flat tax on foreign income, no pensioner regime of the Portuguese or Greek kind, and no golden visa. Foreign pensions are taxed on the ordinary scale, subject to treaty. The one genuinely large relief is the non-dom regime, and it does not work for everyone.

Non-dom and the remittance basis

Ireland is among the few EU countries that have kept the remittance basis. If you are tax resident but not Irish domiciled, foreign income and gains are taxed only when the money is brought into Ireland. In practice:

• dividends, interest and gains on foreign assets are untaxed while the funds stay in foreign accounts;
• salary for work physically performed in Ireland never qualifies - it is taxed in full;
• a remittance is not only a bank transfer: paying Irish expenses with a foreign card, importing goods bought abroad, or repaying an Irish loan from foreign funds all count as bringing income in;
• mixed accounts are the main source of assessments. Where capital and income sit together, Revenue treats income as remitted first. Accounts have to be separated before Irish residence begins, not afterwards;
• the regime is open-ended and free, unlike the abolished UK version. The separate €200,000 domicile levy targets Irish-domiciled individuals and citizens with large Irish assets and a small income tax bill, not new arrivals.

SARP - relief for assigned employees

The Special Assignee Relief Programme excludes 30% of income above a threshold from the income tax base. From 1 January 2026 the basic salary threshold for new entrants rises from €100,000 to €125,000, with a €1 million cap. The conditions: at least six months working for the same employer abroad before the move, and no Irish residence in the previous five years. The programme runs to 31 December 2030, and the annual employer return deadline moves from 23 February to 30 June. Note that the relief removes income tax only - USC and PRSI are due on the full amount.

Other regimes

• Foreign Earnings Deduction - for employees of Irish employers who spend at least 30 days a year working in a specified list of countries outside the EEA. Extended to the end of 2030, with the maximum deduction raised to €50,000.
• Split-year relief - in the year of arrival or departure, employment income outside the Irish period is not taxed.
• Trans-border workers relief - for Irish residents who work and pay tax in another country, most often Northern Ireland.

The honest conclusion: Ireland suits someone living on foreign capital and not bringing it in. For someone earning in Ireland it is expensive, and there is no relief in the system that changes that.

Filing: deadlines, penalties and whether an audit is required

A PAYE employee usually files nothing at all - the employer withholds in real time. Returns are filed by people with non-PAYE income, a shareholding in a company, rental income, foreign accounts, or reliefs to claim.

Preliminary tax is the main surprise for an entrepreneur who has just arrived. On 31 October you pay not only the final tax for the previous year but also an advance for the current one: at least 90% of the expected current-year liability or 100% of last year's. In the first full year of trading this effectively doubles the payment, and cash flow has to be planned around it. Companies work the same way: smaller companies pay preliminary tax in a single instalment before the end of the period, larger ones in two.

Penalties. A Form 11 or CT1 filed up to two months late attracts a 5% surcharge on the tax, and more than two months late a 10% surcharge. Both are subject to a fixed monetary cap, whose amount should be confirmed at the date of filing. On top of the surcharge, interest runs daily - roughly 8% a year on income tax, corporation tax and CGT, and around 10% a year on VAT and PAYE. Interest is not creditable and is not deductible.

Audit. Not required for everyone. A company is exempt if it meets at least two of the three small company criteria: turnover up to €15 million, balance sheet total up to €7.5 million, and an average of up to 50 employees. The exemption is lost where the company files its annual return late twice within five years - a single late filing no longer removes it automatically, but a second one does. Financial statements are prepared and filed with the CRO in any case, where they become public: unlike many offshore jurisdictions, Irish company accounts are on the open record. Bookkeeping and reporting support is covered in our audit and reporting section.

Double taxation: Russia, the CIS and how credit works

Ireland has signed comprehensive double taxation agreements with 78 countries, around 75 of which are in effect. The network covers every major economy and most of the CIS: Russia, Ukraine, Belarus, Kazakhstan, Armenia, Georgia, Moldova and Uzbekistan.

The treaty with Russia, signed in 1994, has not formally been terminated, but since 8 August 2023 Russian decree No. 585 has suspended its key articles - those granting reduced rates and exemptions on dividends, interest, royalties, employment income and independent personal services. Ireland has not denounced its side. The general provisions continue to operate: definitions, residence rules, the articles on relieving double taxation, and exchange of information. In practice this means Russian domestic rates apply without treaty benefits on payments out of Russia, while credit for the tax paid is broadly still available on the Irish side. Structures built on the treaty's reduced rates no longer work, and every individual payment needs to be checked on its own facts.

How relief works. Ireland relieves double taxation by the credit method: foreign tax is set against Irish tax, but only up to the amount of Irish tax on the same income. Where the foreign rate is higher, the difference is simply lost. Beyond treaty credit there is unilateral relief for certain income even without an agreement, and since 2025 foreign dividends are frequently exempt outright under the participation exemption - simpler than a credit and almost always better.

An important point for non-doms: if you use the remittance basis, foreign income never enters the Irish base - so there is nothing to credit against. Foreign tax credit can be claimed only on income you have actually returned in Ireland. That produces an occasional paradox: withholding tax suffered abroad is lost with no compensation, because there is no Irish tax to set it against.

Worked examples: an employee and an entrepreneur

The figures below are for 2026, for a single person with no children, no pension contributions and no other reliefs. PRSI is calculated allowing for the increase on 1 October 2026, so the annual effective contribution is slightly above 4.2%.

Note the gap. At €55,000 the effective burden looks moderate at 23%, because most of the income sits inside the 20% band and the credits do their work. But every euro above €44,000 costs 52%, and doubling the salary pushes the effective rate to 38%.

Now an entrepreneur with €100,000 of annual profit, and three ways of running the same activity.

The conclusion often surprises people: the 12.5% rate does not by itself reduce an owner's personal burden. If all the profit is extracted, a company costs more than sole trader status - the dividend is taxed on the full 20/40 scale plus USC and PRSI, on top of corporation tax already paid. A company wins in two situations: when profit is genuinely reinvested and stays inside, and when the business is eventually sold, where revised entrepreneur relief gives 10% CGT within the €1.5 million lifetime limit.

Features of taxation in Ireland

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