Paying taxes is a part of life… and that is no different in Ireland. What is different however are the tax rates themselves. Ireland has made a name for itself as one of the top places to start an international business, mainly because of their corporate tax rates.
Income Tax Rate
The Irish tax rate for income follows a two bracket system which is quite straightforward.
|Tax Rate||Taxable Earned Income|
|Tax Status Classification|
|20%||Up to 33,800||Individuals with no dependents|
|20%||Up to 37,800||Single or widowed and qualifying for One-Parent Family tax credit|
|20%||Up to 42,800||Married couples **|
|40%||Remaining earned income||All categories|
** The bracket for married couples (up to €42,800) may be increased by either €24,800 or the income of the second spouse, using the lower amount. The updated maximum rate for married couples (€67,600) would now be double that of a single person (€33,800). It is important to note however that increases are not transferable between spouses.
Stamp Duty (Transfer Tax)
When purchasing real estate in Ireland, the buyer handles the stamp duty, which is between 1-2% of the market value.
Capital Gains Tax
The standard Capital Gains Tax in Ireland is 33%. However, a rate of 40% can apply to certain offshore funds and foreign life insurance policies.
Irish Local Property Tax (LPT) is charged annually through a self-assessment on the value of all residential properties. According to Revenue.ie, Ireland’s Tax and Customs:
“The amount of LPT due for 2017 depends on the value declared for the property on 1 May 2013 and the LPT rate applying to the property for 2017. Property values are organised into valuation bands. The tax liability is calculated by applying the tax rate to the mid-point of the band. The rate of LPT is 0.18% for properties up to a market value of €1m. Residential properties valued over €1m are assessed at the actual value at 0.18% on the first €1m in value and 0.25% on the portion of the value above €1m (no banding applies).“
Value Added Tax (VAT)/Sales Tax
The VAT or Value Added Tax rate for Ireland is a standard 12%.
Ireland’s corporate tax rate is among the lowest in the world at 12.5%. For non-trading (passive) income, a rate of 25% applies. Corporate tax rates have been one of the principal reasons that companies have been attracted to Ireland over the past few decades.