Deposit Interest Retention Tax (DIRT)
Deposit Interest Retention Tax (DIRT), is a form of tax in the Republic of Ireland. The tax itself happens at the source of any interest deposits, and is taken before interest is paid on earnings. The decision on whether a deposit is subject to DIRT is made by financial institutions themselves.
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For the 2019 tax year, the rate of DIRT has decreased to 35% (from 37% last year in 2018). For the 2020 tax year, it will decrease again to 33%.
Does DIRT have to be declared on my tax return?
Yes, any deposit interest you've earned has to be noted on your tax return. The amount of deposit interest must be the total amount before the Deposit Interest Retention Tax was taken. The tax return you fill in will depend on whether you are a Pay As You Earn (PAYE) employee, or are instead doing your tax return via self-assessment.
If you are filling in a self-assessed tax return, then you should fill out section F of your Form 11 titled "income fees, convenants, distributions". You can submit Form 11 via the Revenue Online Service.
If you're under the Pay As You Earn system, then you should be using Form 12, and fill out any declared DIRT under the "Irish Deposit Interest" section. For this scenario, your non-PAYE income must be less than €5,000. If your non-PAYE income is €5,000 or higher, then you'll have to follow the self-assessment method and use Form 11.
Who pays Deposit Interest Retention Tax?
Everyone- there aren't really any ways around it, unfortunately. This is unless you are able to claim an exemption or a refund on DIRT- both of these cases we'll cover below.
What about if the account the deposit comes from is not Irish?
If you get interest from an account within the European Union (that isn't Irish), you still have to pay Deposit Interest Retention Tax, and the details need to be included on your tax return for that year. If you fail to file your tax return with this information in time, then the amount will be taxed at 40%.
If the account you recieve the interest from is outside the European Union, then it will also still subject to Deposit Interest Retention Tax so long as you are a standard rate tax payer and have completed your return before the deadline. Like with EU accounts, if you pay a higher rate of tax or if you fail to complete your tax return on time, 40% tax will also apply.
Are there any cases where you're exempt from paying Deposit Interest Retention Tax?
Yes, you can apply for an exemption on paying DIRT so long as you meet the following criteria:
- You are 65 years or over and your total yearly income (including any interest) is below the annual exemption limit - €18,000 if you're single, or €36,000 if you're married.
- You are permanently incapacitated
- You are not an Irish resident, have declared as a non-resident, are not required to pay tax in Ireland, and do not share a bank account with an Irish resident.
Is it possible to get a refund of Deposit Interest Retention Tax?
Yes, in some cases it's possible to claim a refund of DIRT from Revenue, idue ot any of the following criteria:
You are over 65 years of age
Your income was temporarily above the exemption limit
You've already applied for a DIRT exemption, but DIRT had already been taken by the financial institution
You have become incapacitated (mentally or physically handicapped- or are the carer of someone who is, in which case you can apply for a refund on their behalf).