Ireland Fact-File Part 2:
Individual Business Domestic Taxation

2.3 Ireland Individual Income Tax Rates and Bands

The tax structure for individuals in business

Updated in December 2010 Sole traders are taxed under the personal income tax regime on business profits, at rates of between 20% and 41%, (with the latter rate applying on income above EUR32,800 for a single taxpayer (with the threshold reduced from EUR36,400 in the budget delivered in December 2010); EUR36,800 for a single parent taxpayer (down from EUR40,400 previously), EUR41,800 (down from EUR45,400 previously) for a one-salary married couple; and EUR65,600 (down from EUR72,800 previously) for a two-salary married couple.

However, the headline rate for individual taxpayers is generally 20%, although restrictions announced in the 2010 Finance Bill to reliefs afforded to higher income taxpayers have resulted in an effective 30% rate for this group. Taxpayers availing of specified reliefs became subject to relief restriction provisions at an adjusted income level of EUR125,000 (down from EUR250,000) and where adjusted income reached EUR400,000 (down from EUR500,000), they are subject to the full restriction, and liable to pay the effective 30% rate, as mentioned above.

In January 2009, a new income levy was introduced, payable on gross income before any reliefs are deducted. Non-resident and non-domiciled taxpayers were liable to pay the income levy on any Ireland-sourced income, in the same way as for ordinary income tax.

Employers were responsible for deducting income levy payments from the salaries of their employees, and self-employed taxpayers needed to make an initial income levy payment alongside their preliminary tax payment, with the balance payable once the final assessment takes place.

From May 2009, the income levy was imposed at the following rates:

• Income to EUR15,028: Exempt
• Income to EUR75,036: 2%
• Income to EUR174,980: 4%
• Income above EUR174,980: 6%.

However, in the December 2010 austerity budget, it was announced that the income levy and the health levy would be scrapped, and replaced (from January 1, 2011), with an Universal Social Charge (USC) payable on gross income from almost all sources, at the following rates:

• Income up to EUR10,036: 2% if under 70 years of age, 2% if over 70;
• Income between EUR10,037 and EUR16,016: 4% if under 70 years of age, 4% if over 70;
• Income in excess of EUR16,016: 7% if under 70 years of age, 4% if over 70.

Penalties imposed for late or non-filing of income tax returns vary according to whether the penalty is being imposed under the individual income tax system, but can include an initial charge, and an increasing surcharge (representing a percentage of the unpaid tax), up to a maximum amount. The use of allowances can also be restricted, if the return is filed late.

Tax returns can be filed via the Revenue Online Service, and in fact, in 2009, this became compulsory for larger businesses.

Introductory Guides

Brief, clearly written summaries with links to relevant sections of the Fact-File. The Fact-File itself is linked in full below.

Ireland Artist Tax Guide

Ireland Contractor Tax Guide

Ireland Entrepreneur Tax Guide

Ireland Professional Tax Guide

Ireland Small Business Tax Guide

Ireland Sportsperson / Entertainer Tax Guide

Fact-File

Part 1: Business Formation for Individuals

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