Ireland (Eire) - Tax Guide for Freelance Contractors

Tax residents in Ireland:          are liable to pay Irish tax on their worldwide income,
Non tax residents in Ireland:   are liable to pay tax only on their Irish-source income.

Residence:

• Residence is not determined by tax law, but according to the circumstances. The following circumstances are considered important: the availability of a permanent home, the place where the spouse and the children live and the centre of personal and economic relations.

Domicile:

• Is a concept different to residency or nationality and in essence means the place gained through birth or by choice (i.e. the place where an individual intends to ultimately return. Individuals who are deemed Irish resident but not Irish domiciled can normally qualify for the remittance rule basis whereby any non-Irish and non-UK source income and gains are only taxed in Ireland if the income or gains are remitted to Ireland.

Married persons may elect to be taxed either jointly or separately.

Taxable income includes:

• salary,
• fees,
• bonuses,
• benefits in kind (company cars, certain employer loans, accommodation allowances, etc.).

Certain deductions are permissible for 2009 including:

• tax credits applicable for single person EUR 1’830, married person EUR 3’660 and PAYE EUR 1’830,
• the first EUR 5’210 (doubled for married taxpayers) are exempt from taxes,
• the above exemption limit is increased by EUR 575 for each of the first two dependent children and by EUR 830 for the third and subsequent children,
• business expenses are usually not taxable, but must satisfy the strict revenue rules on being incurred “wholly, exclusively and necessarily” in the performance of the duties of the employment.

Income tax rates for 2009:

• 20% for the first EUR 36’400 for a single person without dependent children,
• 20% for the first EUR 45’400 for a married couple with one income,
• 20% for the first EUR 72’800 for a married couple with two incomes,
• 41% on the excess.

Miscelleanous

New Income Levy introduced in 2009

Income levy rates for 2009:

• 1% on gross income up to EUR 100’100 per annum or EUR 1’925 per week,
• 2% on gross income from EUR 100’101 to EUR 250’120,
• 3% on the excess income amount.

The levy will not be applied to income of EUR 18’304 or less per annum. The levy is paid on gross income, before deductions of capital allowance and / or contributions to pensions. The levy does not apply to social welfare payments including contributory and non-contributory social welfare pensions.