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Tax in Ireland

Nearly all income is liable to tax. Tax on income that you earn from employment is deducted from your wages by your employer on behalf of the Irish Government. This is known as Pay As You Earn (PAYE). The amount of tax that you have to pay depends on the amount of the income that you earn and on your personal circumstances. There are a range of income tax reliefs available that can reduce the amount of tax that you have to pay.

How your income tax is calculated -

Sample (Tax Reliefs)

  • Taxation and medical expenses
  • Separation, divorce and income tax credits and reliefs
  • Employment tax credits and reliefs
  • Single Person Child Carer Credit
  • Housing tax credits and reliefs
  • Tax relief for third-level fees
  • Cycle to Work Scheme

Notice of determination of tax credits and standard rate cut-off point

At the start of the tax year, the Revenue Commissioners will send you a Notice of determination of tax credits and standard rate cut-off point. This shows the rate of tax that applies to your income and the tax credits that reduce the tax payable. Revenue will also send a summary of this certificate to your employer so that your employer can deduct the correct amount of tax. If your circumstances change during the year Revenue will issue a revised certificate.

If you are changing job or starting work for the first time, and your employer has not received this information from Revenue or a previous employer, you will be taxed on a temporary basis called emergency tax.

Tax rates and the standard rate cut-off point

Tax is charged as a percentage of your income. The percentage that you pay depends on the amount of your income.

The first part of your income, up to a certain amount, is taxed at 20%. This is known as the standard rate of tax and the amount that it applies to is known as the standard rate tax band.

The remainder of your income is taxed at the higher rate of tax, 41%.

The amount that you can earn before you start to pay the higher rate of tax is known as your standard rate cut-off point.

Starting work – PAYE

It is important to ensure that your tax is dealt with properly from the start and that your new employer deducts the right amount of tax from your pay. To ensure that this happens, you will need to do two things:

  • Give your employer your PPS Number. This number is your unique personal identification number for public services. Your employer will then let your tax office know that you have started work and that they are your employers.
  • Apply for a certificate of tax credits. You will need to complete an application form to do this. It is called Form 12A Application for a Tax Credit Certificate (pdf) - see 'How to apply' below.

To ensure that your employer and the tax office have time to have everything sorted out before your first pay-day, it is advisable to do all this as soon as you accept an offer of a job (even for part-time or holiday employment).

Your own personal circumstances dictate the amount of tax credits you are entitled to. The tax office will then forward you a detailed statement of your tax credits. Your employer will also be notified of your tax credits.

I'm moving to Ireland soon - how do I get a PPS Number?

You cannot apply for a PPS Number before you arrive in Ireland.

You must be living in Ireland to apply for a PPS Number.

You will be asked to produce documentary evidence of identity and residence in Ireland. Different documentary evidence will be required, depending on your nationality.

Proof of Identity

Proof of identity is a vitally important aspect of the registration procedure and must be established before a PPS Number is allocated.

The following are the prescribed documents to accompany a PPS Number application:

  • Current valid Passport
  • Valid Irish Address

The following are not acceptable as Proof of ID

  • Baptismal Certificate
  • Employment Identity cards or Personal letters
  • Photo-copies of certificates/document
  • Expired documents (For Irish and UK citizens passports expired within the last 12 months may be accepted)

The following are acceptable evidence of address:

  • Household utility bill
  • Official letter/document
  • Financial statement
  • Property lease or tenancy agreement
  • Verified employers letter
  • All documents must show the applicant's name and address

Notification of PPS Number

Following successful registration, customers will be advised of their new number through the issue of a letter of notification sent automatically to the address given on the application form within 3 to 5 working days.

This letter is acceptable proof of one's number for transactions with specified bodies for public services e.g., health, education, Revenue, employment, Driving Licence.