Ireland's Individual Income Tax Regime
Like many countries, Ireland operates a progressive individual income tax regime. There is, first of all, a 20-percent standard income tax rate. In the case of single taxpayers without children, this rate applies on the first EUR36,800 of income, with a 40 percent rate applying thereafter.
Pay-related Social Insurance (PRSI) is payable by both employers, at a rate of 8.8 percent or 11.05 percent depending on weekly wages, and by workers, at a four percent rate on all earnings.
Universal Social Charge (USC) is payable by employees in Ireland whose annual income exceeds EUR13,000, at rates of 0.5 percent, 2 percent, 4.5 percent, or 8 percent. The thresholds differ for self-employed persons, with a higher rate of 11 percent in place on those with income exceeding EUR100,000.
COVID Support Schemes For Individuals
Taxpayers resident in Ireland that work and pay tax in another country can claim Transborder Workers Relief if they are obligated to travel to a place of work overseas, either daily or weekly, provided that: they are tax resident in Ireland; the country in which they work has a DTA in place with the Republic; they have paid tax in the other country; and they are present in Ireland for at least one day for every week worked overseas.
Obviously, though, the pandemic made cross-border travel difficult and in some cases impossible. The Irish authorities have therefore kept the relief available for workers who would otherwise have benefited, but who have been obligated to work from home in Ireland.
This concession was first made available in 2020. Provided all of the other conditions for claiming the relief are met, the Revenue has said it “…continue to apply for the period in 2022 during which public health guidance in the State, or in the country where the duties of employment are normally performed, requires individuals to work from home.”
In a previous blog, we touched on tax supports available for persons working from home.
These include a EUR3.20-per-day allowance businesses can pay their employees, without incurring tax, for every day the worker works remotely. Any amount paid beyond this must have had tax deducted.
Alternatively, for 2020 and 2021, taxpayers could claim an amount equivalent to 10 percent of heating and electricity costs and 30 percent of broadband costs. The amount that could be claimed was to be reduced if the taxpayer worked remotely only part time or if others also worked remotely from the same home.
Ireland improved and formalised these arrangements in Budget 2022, increasing the benefits for remote workers to enable them to claim 30 percent of all “vouched expenses”, including for heat, electricity, broadband, and certain other home working-related expenditures.
Temporary reliefs, which are in the process of being wound down now, were put in place for self-employed taxpayers in Ireland “carrying on a trade or profession” who had been adversely impacted by the pandemic and associated restrictions. These allowed taxpayers to more quickly take advantage of earlier losses and capital allowances.
Finally, with regard to unemployed Irish residents, the Government put in place support in the form of the Pandemic Unemployment Payment (PUP), which was granted to both employed and self-employed taxpayers who had lost their job after March 13, 2020, as a result of the pandemic. The amounts available varied according to the timing of the job loss and the previous weekly wage of the recipient. The scheme closed to new applicants on January 22, 2022.
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