Irish Taxation offers advice on income tax which includes tax registration and filing of income tax returns.
Basic income tax rates in Ireland
For the Irish income tax there are two rates: 20% for single people with an income of up to €34,550 per year and 40% for an income above.
Single persons can avail of an annual tax credit relief of €1,650 which can be raised up to €3,300 for married couples. Everyone who is employed can also avail of an additional annual tax credit of up to 1650 € per annum. There may be further credits from the payable tax relating to personal circumstances.
Universal Social Charge (USC)
The Universal tax rates range from 1% – 7 % and the applicable rates depend on the annual income:
- First €12,012 with a 0.5% rate
- Next €7,360 with a 2% rate
- Next €50,672 with a 4.75% rate
Social Security Insurance (PRSI)
The rates for Social Security Insurance (PRSI) are in general 10.75% for the employer and in general 4% for the employees. Other rates can apply for workers on low income or self- employed people
Before workers are posted in Ireland they should apply for the A1 form. This form makes sure that the social insurance can still be paid in their country of residence.
Posted workers without a form A1 will be subject to PRSI and social insurance in the country where they are posted to. Otherwise the income will in general be subject to Irish PRSI.
The standard rate for corporation tax is 12.5% in Ireland. For passive income, e.g. income from rent or interest, a rate of 25% applies. This rate applies also for companies that are non-tax residents in Ireland.
Companies who are active in the Irish market should be aware of what constitutes a permanent establishment. Companies with a permanent establishment are in general taxed like an Irish resident company.
What constitutes a permanent establishment is usually determined in the double tax agreement between Ireland and the respective country. Usually a permanent establishment is created through the place of management as it is stated in the German Irish double tax agreement.
For a construction company a permanent establishment is basically based on the construction site. If a German construction company works in Ireland for 12 months, a permanent establishment is assumed. For companies from the UK a shorter period of 6 months applies.