Understanding tax in Ireland can be daunting and even scary. This guide will explain clearly the main tax terms you need to know if you’re an expat or an employee living in Ireland.
Below, you’ll find essential information regarding tax terms in Ireland targeted at individual taxpayers and business owners in the following categories:
- Expats/Non-Residents
- Employees
By the end of the guide, you’ll know your cross-border tax from your PAYE!
Let’s get to it.
A-Z of Tax Terms for Non-Residents and Expatriates
Knowing how exactly these arrangements will impact your tax situation is difficult when living or working abroad. Understanding your tax obligations can be complicated, especially for those moving to or from Ireland or working temporarily abroad.
Speaking with a tax compliance expert and advisor can give you peace of mind. It’s just a matter of getting in touch.
But what essential tax terms might non-residents and expatriates come across while figuring out their tax situation?
Alienation of property
Alienation is a legal term for disposing of or transferring a property to a third party. For non-residents, any gains derived from this process on Irish assets may be subject to potential tax implications, such as Capital Gains Tax.
As a non-resident, speaking with a tax compliance expert and advisor is wise before selling or transferring property to another party.
Bilateral Tax Treaty
Bilateral Tax Treaties, also known as ‘Double Taxation Agreements’, are agreements between two countries to prevent double income taxation. Before moving to or from Ireland, expatriates should be aware of bilateral tax treaties between Ireland and the country they’re moving to or from.
For more information on the tax implications of such agreements, see the following:
- The Tax Implications Of Dual Residency In Ireland
- Moving to Ireland as an Expat
- An Expat’s Guide to Moving to Ireland
- Tax Compliance Tips For Expats Moving To Or From Ireland
Cross-border tax implications
Cross-border tax implications refer to any tax considerations individuals must make when conducting business or earning income abroad.
Non-residents and expatriates should always assess cross-border tax implications as part of their tax planning strategies, which will likely involve speaking directly with a tax advisor about their unique circumstances.
Generally, those earning income across borders must consider potential double taxation, withholding requirements, and compliance in both jurisdictions.
For more on this, see this Expat Taxes case study on clarifying cross-border taxation, as well as the following articles:
- Transborder Workers’ Relief For Irish Commuters
- Understanding Foreign Earnings Deduction (FED) For Irish Taxpayers
- Navigating Employment Tax When Sending Irish Employees Overseas
- Global Mobility Insights
Domicile levy
In Ireland, the domicile levy applies to all Irish-domiciled individuals who meet the qualifying criteria, though it usually applies to individuals with significant property and financial assets.
You may have to pay a domicile levy if:
- You are Irish-domiciled
- Your worldwide income in the year exceeds €1m
- You have Irish property with a value greater than €5m, and
- Your Irish Income Tax for the year is less than €200,000
For more information on where you are tax-domiciled, see here.
Exchange Controls
Exchange Controls usually refer to restrictions governments impose on moving funds into Ireland or from Ireland to other countries.
While there are generally no restrictions on foreign investment or the transfer of funds across borders in Ireland, tax rules must always be investigated, confirmed, and complied with regarding your personal circumstances.
Expatriate relief
Expatriate relief is a term we have coined that describes tax relief or deductions that might apply to expats who move to Ireland for work purposes.
One example is the Special Assignee Relief Program or SARP. SARP provides Income Tax relief for certain people who are assigned to work in Ireland from abroad and applies to assignments during any of the tax years from 2012 to 2025.
For more detailed information about SARP, see this article.
Irish Tax is complicated and hard to understand. Our FREE guide demystifies what you can do to save money TODAY. Download the guide now and learn how to keep more money in your pocket.
Foreign Earnings Deduction
Foreign Earnings Deduction (FED) is a tax relief program for individuals working abroad for part of the year. Irish resident employees/directors earning employment income abroad may qualify for FED, reducing Irish tax liabilities on foreign income.
While there are strict criteria to qualify for FED, generally, you’re required to work in a relevant State for at least:
- 60 qualifying days in 2012, 2013, and 2014
- 40 qualifying days in 2015 and 2016
or
- 30 qualifying days from 2017 to 2025
Note: You must also work the number of qualifying days during a tax year or a continuous 12-month period spanning two tax years.
It’s also important to note that you cannot claim FED if you:
- Are a civil or public servant
- Receive the key employee research and development relief
- Are taxed using the split year residence rules
- Receive the Transborder Workers’ Relief
or
- Receive relief under the Special Assignee Relief Programme
To find out more about FED, see this article.
Global Income Tax
Global Income tax, also known as ‘Worldwide Income Tax,’ is a chargeable tax on income earned worldwide by a resident of Ireland. Irish tax residents are subject to income/capital gains tax on a worldwide basis.
In simple terms, worldwide income is the total income you earn anywhere in the world in a tax year — something that may apply to expats or non-residents when moving to or from Ireland during a tax year.
It is important to speak with a tax advisor before making assumptions about your tax obligations. This will ensure accurate financial reporting and an optimised tax strategy.
For more information on this topic, see these articles:
Habitual residence condition
Irish tax law does not define the term ‘habitual residence condition’. But, in practice, it means that if you have a proven close link to Ireland, you may be entitled to apply for certain social welfare payments.
Irish tax legislation tests tax residency using only the ‘days’ residency test. In other words, if you have not spent the required amount of days in Ireland in a given tax year, you are not considered Irish tax resident.
Jurisdictional tax rates
Jurisdictional tax rates refer to tax rates applicable for residents and non-residents in different jurisdictions. As each country has its own tax laws and regulations, non-residents and expatriates must assess jurisdictional tax rates to ensure accurate and compliant tax filing.
Knowledge Development Box (KDB)
KDB is a Corporation Tax (CT) relief on income from qualifying assets, mainly associated with intellectual property.
Companies that qualify for this tax incentive may have their qualifying profits taxed at the favourable rate of 6.25%.
Local Property Tax (LPT)
LPT is a tax on residential properties based on their market value. As LPT is self-assessed, non-residents and expats who own residential properties in Ireland should ensure they understand their obligations regarding LPT.
These include assessing the market value of your properties accurately and filing LPT returns on time. Additionally, you should stay informed about any updates or changes to LPT regulations to remain compliant with Irish tax laws.
To calculate your local property tax, use this online calculator.
Note: Every Irish residential property owner must pay Local Property Tax, whether they live in Ireland or abroad.
Marginal relief
Marginal relief is tax relief for individuals with income above the tax threshold. Expatriates with income close to tax thresholds may qualify for marginal relief, reducing tax liabilities and saving them money.
Even if your total income is more than the exemption limit, you may still be able to claim marginal relief if:
- You or your spouse or civil partner is over 65
and
- Your total income is less than twice the exemption limit.
Non-Resident Landlord Scheme
In Ireland, many people refer to the Non-Resident Landlord Withholding Tax (NLWT) system as the Non-Resident Landlord Scheme. Under this system, non-resident landlords without an appointed collection agent require their tenants to withhold 20% of rental payments and remit this amount to Revenue.
For more detailed information about NLWT, see this article.
Note: A non-resident landlord is not a tax-resident of Ireland but rents out a property in Ireland.
Overseas income
In short, overseas income describes any income earned from outside of Ireland. Non-residents and expatriates should report overseas income for tax purposes, ensuring compliance with tax laws and accurate financial reporting.
Permanent Establishment (PE)
A Permanent Establishment (PE) refers to a fixed place of business through which an enterprise carries out its activities. This term is important for non-resident corporate entities as many Income Tax treaties recognise it.
Remittance basis of taxation
The remittance basis of tax is a term used to describe when non-domiciled individuals are only required to pay Irish tax on foreign income (including rental income from foreign property) brought into Ireland.
Non-residents and expatriates who are non-domiciled qualify for the remittance basis of tax. It’s important to understand that the criteria for the remittance basis of tax are quite complex.
To understand more about your eligibility for the remittance basis of tax in Ireland, speak to our experts and see the following two articles:
- The Remittance Basis Of Taxation For Foreigners Moving To Ireland
- The Remittance Basis Of Tax In Ireland: The Dos And Don’ts
Split-Year Treatment
Split-Year Treatment is a tax treatment for individuals moving to or from Ireland during the tax year. Non-residents and expatriates relocating to or from Ireland should consider split-year treatment to get the best tax outcome.
To learn more about Split-Year Treatment in Ireland, see these articles:
Transborder Workers’ Relief
Transborder Workers’ Relief is a relief for people who reside in Ireland but work and pay taxes in another country. This system supports transborder workers by reducing the risk of double tax on the same income.
Generally, you can claim Transborder Workers’ Relief if you travel daily or weekly to your place of work outside Ireland. Various conditions apply for the relief to be granted.
For more detailed information about Transborder Workers’ Relief, see this article.
Universal Social Charge (USC) exemption
The Universal Social Charge (USC) is an income tax in Ireland. As the name suggests, the USC exemption is an exemption from this charge.
You will pay USC on your full income if your income exceeds the exemption limit. The exemption limit for 2024 is €13,000.
Some other payments and allowances are also exempt from USC. For more information, see the Revenue website.
Value-Added Tax (VAT) refunds for tourists
VAT refunds for tourists refer to the refund of VAT paid by visitors to Ireland on goods purchased in the State. In cases where VAT is not immediately deducted from the price of the goods, non-residents visiting Ireland should retain VAT receipts to claim VAT refunds for eligible purchases.
Withholding tax on Irish source income
Withholding tax is a term used to describe tax withheld from certain types of income. For example, interest paid by an Irish company to a non-Irish resident may be subject to interest withholding tax, currently at 20%.
For non-residents and expats, it’s crucial to consult with a tax professional before making assumptions about your withholding tax obligations. Especially in cross-border income and tax treaty implications, seeking expert advice ensures compliance with Irish tax regulations and maximises tax efficiency.
Year of arrival or departure
When discussing ‘year of arrival or departure’ in tax terms, the term generally refers to the tax implications for individuals arriving or leaving Ireland during the tax year.
Non-residents and expatriates should always consider their arrival and departure to and from Ireland, as this can significantly impact their tax treatment.
For more, see the following article on Split-Year Treatment in Ireland.
Zero-rated exports
Zero-rated goods are products exempt from Value Added Taxation (VAT). In terms of exports, the zero rate of VAT applies to:
- Supplies of goods that are transported directly by, or on behalf of, the supplier to a destination outside the EU VAT area
- The supply of goods to be dispatched or transported directly outside the EU VAT area by, or on behalf of, the purchaser of the goods, where that purchaser is established outside the State.
For a full list of the goods and exports to a zero rate of VAT applies, see here.
Irish Tax is complicated and hard to understand. Our FREE guide demystifies what you can do to save money TODAY. Download the guide now and learn how to keep more money in your pocket.
A-Z of Tax Terms for Employees
As an employee, tax returns are just a natural part of life.
But did you know that understanding relevant tax terms can help improve your financial well-being? From tax deductions and credits to tax planning terms and strategies, being better informed can enable you to make smarter financial decisions and optimise your tax situation.
Let’s explore some essential tax terms for employees:
Annual tax statement
An annual tax statement, also known as an ‘end of year statement’ or ‘Statement of Liability’ is issued to Pay As You Earn (PAYE) employees and contains details of:
- Your total income from all sources
- A breakdown of your earned Income Tax credit entitlements
- Any tax and Universal Social Charge (USC) that you have paid during the year
- Any potential underpayments or overpayments of tax
If you are registered for Revenue Online Service (ROS), you can request this statement directly from Revenue, and any tax refund you are due will also be processed through this system.
Note: While tax refunds are relatively common in Ireland, underpayment is also possible. This is why it’s important to effectively manage your financial documents and stay on top of any taxes owed. If you owe Revenue taxes in arrears, timely payment is vital to avoid legal repercussions.
Benefit-in-Kind (BIK)
BIK is a term used to describe non-cash benefits provided by employers to employees that are still subject to tax. For example, employees may receive perks like a company car or private health insurance – all of which fall under BIK taxation.
Note: Starting January 1, 2022, you can give employees up to two small benefits, tax-free, each year. This qualifies as a Small Benefit Exemption.
Ceiling on taxable income
The ceiling on taxable income refers to the maximum income subject to taxation at a specific rate. For specific information on the latest tax rates, bands, and reliefs, visit Revenue’s website.
Director’s loan
A director’s loan is money you take from your company’s accounts that cannot be classed as:
- A salary, dividend, or expense repayment
- Money you’ve previously paid into or loaned the company
Always consult a tax advisor specialising in corporate services for more details on what counts as a director’s loan and its tax implications.
Emergency Tax
Emergency Tax is a temporary tax rate applied to employment income. An Emergency Tax rate generally comes into effect when an employer does not have sufficient tax information for an employee.
Therefore, employees subject to emergency tax should provide tax information to their employers as soon as possible to ensure they are taxed accurately.
Exit Tax
Exit Tax is a tax imposed on gains from certain investments upon withdrawal. Employees and investors should understand exit tax implications when redeeming investments, as this can affect their overall investment returns and what’s classed as income for that year.
Currently, the Exit Tax rate for individuals in Ireland is 41%, but we advise speaking with a tax consultant to discuss possible implications and maintain compliance.
Flat-rate expenses
Flat-rate expenses refer to the cost of equipment that you might need for work. Sometimes, tax deductions for these expenses may apply to employees in certain professions like healthcare or construction (without the need for receipts).
You can find further details on flat-rate expenses and deductions here.
Gross pay
Gross pay refers to total earnings before deductions for taxes and other expenses. Employees should assess their gross pay for accurate budgeting and financial planning, considering tax relief and other payroll expenses.
Note: The term ‘Adjusted gross income’ is then used to describe your total gross income minus the deductions mentioned above.
Higher rate of tax
In Ireland, the higher rate of tax is a term used to describe the tax rate applying to income above a certain threshold.
As tax bands and rates are subject to change, keeping up with the latest announcements, particularly around Budget time (generally announced in October each year), is important.
For example, in Budget 2024, Income Tax rates remained the same as the previous year (at 20% and 40%), but the standard rate tax band (the amount you can earn before you start to pay the higher rate of tax) was increased by €2,000 (to €42,000) for a single person.
For full details about the latest tax rates, bands, and reliefs, visit Revenue’s website.
Income Tax (IT)
IT refers to tax that needs to be paid on earned income, including wages, salaries, and bonuses.
In Ireland, the first part of your income, up to a certain amount, is taxed at 20%. This is the standard tax rate (the amount it applies to is the standard rate tax band). The rest of your income is taxed at the higher tax rate, 40%.
For specific information on the latest tax rates, bands, and reliefs, visit Revenue’s website.
Note: As an employee, how much tax you pay can largely depend on your entitlement to tax breaks, so it’s always important to research and speak with a professional tax advisor.
Knowledge Development Box (KDB)
KDB is a Corporation Tax (CT) relief on income from qualifying assets, mainly associated with intellectual property.
Companies that qualify for this tax incentive may have their qualifying profits taxed at the favourable rate of 6.25%.
In certain circumstances, the benefits associated with KDB may transfer to employees involved in qualifying intellectual property activities, so it’s important to be aware of such incentives.
Local Property Tax (LPT)
LPT is a tax that every owner of Irish residential property must pay, whether they live in Ireland or abroad. Generally, the tax is self-assessed and calculated based on the current market value of the property in question.
To calculate your Local Property Tax, use this online calculator.
Net pay
Net pay refers to an employee’s total earnings after deductions for taxes and other expenses. Employees should assess their net pay to ensure accurate budgeting and financial planning as part of a tax planning strategy.
For more information on tax planning, see our handy guides:
- Beginner’s Guide to Tax Planning
- 6 Goals & Objectives of Tax Planning
- The Difference Between Tax Planning, Tax Evasion, and Tax Avoidance
Irish Tax is complicated and hard to understand. Our FREE guide demystifies what you can do to save money TODAY. Download the guide now and learn how to keep more money in your pocket.
Occupational pension scheme
The occupational pension scheme is a retirement savings plan an employer provides for its employees. While beneficial for employees wanting to ensure a steady income after retirement, the scheme also offers benefits to employers from a Human Resource perspective — especially when it comes to improving company culture and boosting employee retention rates.
Note: Occupational pension schemes, when in payment, are still taxable sources of income (though relief may apply).
Pay As You Earn (PAYE)
PAYE is Ireland’s system for withholding Income Tax and social insurance contributions from employees’ pay.
Under the PAYE system, Income Tax is charged on:
- Wages
- Fees
- Pensions
- Perks
- Profits
The above list is not exhaustive.
Qualifying deductions
In Ireland, qualifying deductions refer to compliant reductions in taxable income.
Note: Always research before making assumptions about qualifying deductions, as specific criteria and eligibility requirements may apply.
Revenue Online Service (ROS)
ROS is the online system for filing tax returns and managing tax affairs with Revenue, Ireland’s tax and customs authority.
To access the full services associated with this online system, you’ll generally need an Irish Social Security Number known as a Personal Public Service Number (PPSN).
For details on how to obtain a PPSN in Ireland, see this article.
Standard rate cut-off point
The standard rate cut-off point is the threshold beyond which income is taxed at the standard rate (20%).
As part of Budget 2024, the standard rate tax band (the amount you can earn before paying the higher tax rate) was increased by €2,000 to €42,000 for a single person.
Beyond this amount, an employee’s income will be taxed at the higher rate of 40%.
Tax credits
In simple terms, tax credits are amounts subtracted directly from an individual employee’s tax owed, reducing their tax liability. Employees should research, verify, and claim all tax credit entitlements to maximise tax savings and optimise financial planning.
For more information on a specific immediate or refundable tax credit, download our handy guide here.
Universal Social Charge (USC)
The Universal Social Charge (USC) is an income tax in Ireland. As the name suggests, the USC exemption is an exemption from this charge.
You will pay USC on your full income if your income exceeds the exemption limit. The exemption limit for 2024 is €13,000.
Some other payments and allowances are also exempt from USC. For more information, see the Revenue website.
Voluntary contributions
Voluntary contributions refer to additional pension contributions individuals make to supplement their retirement income. Employees may consider voluntary contributions to boost their retirement savings and ensure financial security.
Withholding tax for employees (PAYE)
Tax withholding refers to the process of withholding tax from payments made to employees by their employers. Tax withholding can be a complicated matter (especially when dealing with cross-border employment), so speaking with a tax advisor is vital to maintaining compliance.
Year of assessment
Your tax year of assessment refers to the year your income is assessed for tax purposes. In Ireland, the tax year is the calendar year.
With a better understanding of when tax must be paid, employees can support more accurate tax planning and ensure full compliance with tax laws.
Zero-rate band
While technically, all income is considered taxable in Ireland, if you earn €18,750 or less, you generally won’t have to pay any Income Tax.
This is because your € 3,750 tax credits are more than or equal to the amount of tax you are due to pay.
That said, you may still need to pay a Universal Social Charge (if your income is over €13,000) and PRSI (depending on how much you earn each week).
Note: Information is correct as of March 2024.
Still feeling overwhelmed by tax terms? You’re not alone!
Luckily, there’s always support available from Expat Taxes to simplify things.
We’re here to relieve tax compliance stress by providing one-on-one tax assistance tailored to your unique situation and tax planning goals. Giving you complete peace of mind and helping you save money, our award-winning tax consultancy team is on hand to help.
Book your consultation today, or find out more about the type of people we work with here.
DISCLAIMER: The material in this article is for general information purposes only and does not constitute legal or taxation advice. Legal, financial, investment and taxation advice should be sought before acting or refraining from acting. All information and taxation rules are subject to change without notice. Expats Taxes accept no liability for any action taken based on the information in this article or any of the articles in our blog series. Expat Taxes Limited does not provide financial planning, investment, or mortgage advice; this article is provided only for general information. We are not authorised/licensed to provide financial advice, and this article should not be considered to constitute advice of this type in any respect.
Written by Bryan Wickham, FCA
Having worked in both Ireland and Australia, Bryan brings over 15 years of cross-border experience in tax and accounting to the team. As the head of Expat Taxes’ compliance function, Bryan tackles everything from non-resident landlord tax issues to sole trader compliance — with expertise in niche tax scenarios even industry professionals struggle to understand.
