Tax Rate Query...

Aln_S

Hi all, need your help please.

My Fiancée has recently moved down here from the north and is now working and paying tax at 41%.

She has a bank account in the UK and earns interest on it. Does she have to declare this in the south, and if so is it taxable at 41% or the lower 23% DIRT rate?


Thanks
Alan

nompere

In general deposit interest from other EU countries is taxed in the same way as Irish deposit interest. So basic rate only.

Aln_S

Thanks nompree.

Rang the revenue today but basically they haven't a clue. Might have to get a tax consultant in on this one!

nompere

I've just had a look and there's a section for EU deposit interest on a form 11, at line 303. That line doesn't appear in either a Form 11E (simpler Form 11) or Form 12 (normal PAYE employee's form).

When put into a Form 11 I know it works properly.

In practice Revenue aren't interested in a PAYE taxpayer who receives a few hundred Euro of deposit interest - any liability to levies is minimal. If you came to me in my professional capacity I would tell you to fill in a Form 12 (if anything) and not worry about the interest.

If you're the nervous sort then you're going to have to fill in a Form 11 to get it done properly.

Aln_S

Ok, thanks for the advice. Much appreciated.

Mr. Incognito

Rang the revenue today but basically they haven't a clue. Might have to get a tax consultant in on this one!

oh my god.

seriously?

foreign interest is case 3 and taxed gross with a credit for foreign withholding tax with the exception of UK interest which is taxed in ireland net of foreign tax suffered.

it's very very basic stuff.

nompere

Mr. Incognito wrote: »

foreign interest is case 3 and taxed gross with a credit for foreign withholding tax with the exception of UK interest which is taxed in ireland net of foreign tax suffered.

it's very very basic stuff.

Sorry Mr I, but this isn't true, and hasn't been since 1 January 2005. Since that date deposit interest from banks throughout the EU has been taxed in the same way as Irish deposit interest, with a credit that satisfies the marginal tax liability.

This is copied from www.revenue.ie/en/tax/it/foreign-income-assets.pdf

"Q.3 What rate of tax applies in the State on my foreign deposit interest?

"A. This depends on the location of the financial institution. If it is located in another EU country, tax on the gross interest earned is due at the same rate as tax on Irish deposit interest income – 20% up to 31st December 2008, 23% for the period 1st January 2009 to 7th April 2009 and 25% from the 8th April 2009. In order to avail of this treatment, you must make a timely and accurate return of the foreign deposit interest and pay any tax due by the prescribed return filing date for the year concerned.

"If the interest is earned from a financial institution outside the EU, tax is due at your marginal (highest) rate of tax.

"Prior to 1 January 2005, all foreign deposit interest income, including interest from another EU country, was taxable at the marginal rate – that is, the higher or highest rate at which you pay income tax. Since 1 January 2007 the higher rate of income tax in Ireland has been 41%."

Mr. Incognito

Thanks for that- my apologies- i mixed up dividends and interest