Taxation in Ireland

Unnecessarily complicated.

I don’t understand much about the Irish taxation system so please speak to a tax advisor if you need to pay taxes in Ireland. Even writing this article did not help me understand more about taxation as my mind goes blank when I see a lot of financial information. Therefore, the aim of this article is to give you a summary of my experience so far, giving a bit of a heads up to those reading it because navigating the maze that is the Irish taxation system can take a while.

Endless to-do lists… Picture credits: Paola Bassanese

How to file your taxes in Ireland

You can file taxes online in Ireland and the website you will need is Revenue Irish Tax and Customs.

From there, you need to create an account and if you are self-employed you also need to create a Revenue Online Service profile. The Revenue Online Service or ROS relies on a digital certificate to authenticate your identity: it gets generated once you register with your email and password.

Then comes the difficult bit: filing your taxes.

I am self-employed so the way I file my taxes online is different from someone who is an employee.

The online form that you need to fill is 20 pages long and mostly densely packed with calculations.

The online system will guide you through your tax return and will calculate how much tax you owe but to the initiated it still looks very intimidating and confusing.

Self-employed people like myself must pay preliminary tax.

The Citizens Information website is one of the best sources for information in plain English and I highly recommend it.

Every year the tax bands and tax rates are published so that when you file your tax return you know how much tax you must pay that year.

For example, in 2024 you must pay 20% in taxes if you earn up to 42,000 euro a year and if you earn above that threshold you pay 40% in taxes.

Tax credits are available and they are basically a discount on the tax amount you have to pay based on your personal circumstances. For example, people with disabilities can get tax credits and allowances that can help reduce what they owe to Revenue. Another example is a tax credit for expenses paid such as some types of home renovations.

Even some medical expenses can get tax relief but it depends on the type of treatment you get and medical fees you pay, so you need to check the full list on the Revenue’s website to see what applies to your situation. The tax relief for medical expenses is set at 20% and you need to claim it online (there are two different ways of claiming it depending on whether you are an employee or if you are self-employed).

The more you read the instructions the more the whole picture gets complicated and this is why it’s best to speak to an advisor.

USC and PRSI

If you are a new arrival to Ireland you need to familiarise yourself with many acronyms including USC and PRSI.

USC stands for Universal Social Charge (introduced in 2010) and it goes from 0.5% for the first 12,012 euro earned in a year up to the maximum 8% for salaries above 70,044 euro a year. It is a tax you pay on your gross income.

For self-employment income over 100,000 a year the rate is 11%.

Check with the tax office whether you need to pay USC in case you are earning less than 13,000 euro a year.

PRSI stands for Pay-Related Social Insurance and it’s a 4.1% contribution (from October 2024) based on employment and self-employment income. If you earn below 352 euro a week you don’t have to pay PRSI but do check with the tax office what you need to do.

You need to pay PRSI also on investment income.

If you are self-employed and your total income is less than 5,000 euro a year (2023 figures) then you don’t need to pay PRSI.

Then there’s a whole area of taxable benefits such as employer-provided cars, which comes with its own complicated calculations. The mind boggles.

What happens if you are a freelancer in Ireland