Part 2: Ireland Individual Business Domestic Taxation

2.5 Ireland Husband and Wife Partnerships

Special rules governing husband and wife partnerships or companies

The Irish tax system permits joint assessment of married couples for income tax purposes, providing that they have informed the Revenue of their marital status (although it is not obligatory; both partners can continue to be taxed separately, or as single taxpayers, if preferred).

Under the joint assessment provision, the standard rate band and available tax credits can be allocated between spouses according to their circumstances.

According to Revenue Commission guidance on the matter:

If only one spouse has taxable income, all tax credits and the standard rate band will be given to him or her;
If both spouses have taxable income, they can decide which spouse is to be the assessable spouse and request their local Revenue office to allocate the tax credits and standard rate band between them in whatever way they wish, although PAYE tax credit, employment expenses and the basic standard rate band of EUR27,400 are non transferable.

Joint assessment can be especially useful in situations in which one partner is self –employed whilst the other pays tax under the PAYE system, as the married couple can decide, in line with their personal circumstances, whether most of the tax should be paid under PAYE or in a lump sum on assessment, which will be determined by the manner in which the tax credits are allocated. According to the Revenue: “If you wish to pay most of your tax under PAYE, the tax credits, other than the PAYE tax credit and employment expenses, should be offset against the self assessment income.”

There are no special rules governing husband and wife partnerships, however; they will be treated as any other type of partnership for tax purposes, with the income and liabilities apportioned accordingly.