Self Assessment Tax System >> Deposit Interest

Tags: DIRT, deposit accounts, bank interest

Tax on Irish bank deposit interest (and E.U. bank deposit interest from 2005 onwards) is liable for Irish tax at 27%( DIRT). Under Self Assessment tax rules it is also liable for PRSI at 4%. 
 Irish banks will deduct this tax (DIRT) at source from the interest earned on your account. If you are not liable for income tax you cannot obtain a refund of this DIRT unless you and/or your spouse are aged 65 or over. 

This rule also applies to Deposit Accounts and Special Share Accounts operated by Credit Unions. On the other hand dividends paid by Credit Unions on Regular Share Accounts are liable for tax in the normal way and do not qualify for the special 27% rate. 
Special Term Deposit Accounts operated by banks and Special Term Share Accounts operated by Credit Unions have a special tax exemption on the first €480 interest/dividend earned per annum on a 3 year term account and €635 exemption for the 5 year term account. Interest/dividends in excess of these amounts are liable for DIRT at the 27% rate. However, you cannot have a Special Term Deposit Account with a bank and at the same time a Special Term Share Account with a credit union.
Finally a DIRT rate of 30% applies to deposit accounts where the amount of interest is not determined until time of payment. These are a special type of deposit account operated by banks.
Interest earned on foreign deposit accounts held outside the EU does not qualify for the special 27% tax rate. These are liable for income tax in the normal way. If foreign tax is deducted from the foreign deposit interest you may get a credit for the foreign tax against the Irish tax liability on that income. This depends on the rules of our Double Taxation Agreement, if any, with the foreign country concerned. If we do not have such an agreement with the country concerned then you may not get any credit for the foreign tax paid.

Our Deposit Interest Recording System
This facility allows you to make a record of all your deposit accounts and the amount of interest earned for each tax year. This record must be maintained for a period of 4 years in case it is ever required by the Revenue for inspection.

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