# Taxation in the Republic of Ireland Canonical: https://web4.xpay.bi/en/wiki/wp-en-1973092/ Language: en Published: 2026-10-26T16:01:52.308Z Updated: 2026-10-26T16:01:52.308Z Taxation in Ireland in 2017 came from personal income taxes (40% of Exchequer Tax Revenues, or ETR), and consumption taxes, being VAT (27% of ETR) and excise and customs duties (12% of ETR). Corporation taxes (16% of ETR) represents most of the balance (to 95% of ETR), but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation ## Key facts ## Overview Taxation in Ireland in 2017 came from personal income taxes (40% of Exchequer Tax Revenues, or ETR), and consumption taxes, being VAT (27% of ETR) and excise and customs duties (12% of ETR). Corporation taxes (16% of ETR) represents most of the balance (to 95% of ETR), but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's Hierarchy of Taxes pyramid (see graphic), which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes (\<3% of ETR, being Stamp duty and LPT) and Capital taxes (\<3% of ETR, being CGT and CAT). An issue in comparing the Irish tax system to other economies is adjusting for the artificial inflation of Irish GDP by the base erosion and profit shifting (BEPS) tools of U.S. multinationals in Ireland. In 2017, the Central Bank of Ireland replaced Irish GDP with Irish GNI\* to remove the distortion; 2017 GDP was 162% of 2017 GNI\* (EU–28 2017 GDP was 100% of GNI). Properly adjusted, Ireland's Total Gross Tax-to-GNI\* ratio of 36% is in-line with the EU–28 average (36%), and above the OECD average (33%); Ireland's Exchequer Tax-to-GNI\* ratio of 28%, is in line with the EU–28 average (28%), and the OECD average (27%). Within these aggregate taxation metrics, the most distinctive differences between Ireland's taxation system and those of the average EU–28 and OECD taxation systems, are lower net Irish Social Security Contributions (i.e. PRSI less child benefits), offset by higher Irish Corporation tax receipts. Within Ireland's taxation system, the most distinctive element is the ratio of net Personal Income taxes on higher earners versus lower earners, which is called progressivity. In 2016, the OECD ranked Irish personal taxation as the 2nd most progressive tax system in the OECD, with the top 10% of earners paying 60% of taxes. The 2018 OECD Taxing Wages study showed Irish average single and average married wage-earners paid some of the lowest effective employment tax rates in the OECD, with Irish average married wage-earners paying an employee tax rate of 1.2%. In 2018, the Irish Revenue Commissioners disclosed that 80% of 2017 Irish corporate tax was paid by foreign multinationals, and the top 10 multinationals paid 40% of Irish Corporation tax in 2017. Ireland's Corporate tax system is controversial and has drawn labels of Ireland as a tax haven. In June 2017, Ireland's CT system was ranked as one of the world's largest Conduit offshore financial centers (OFCs) (i.e. places that act as links to tax havens), in March 2018 the Financial Stability Forum ranked Ireland as the 3rd largest Shadow Banking OFC, and in June 2018 tax academics calculated that Ireland was the world's largest corporate tax haven. Ireland's Property taxes (Stamp duty and LPT) are in line with the EU and OECD averages, but unlike Irish Income taxes, are not overtly progressive. ## Distribution of Exchequer Tax Revenues Each year, the Department of Finance is required to produce a report on Estimates for Receipts and Expenditure for the coming year. The table below, is extracted from the "Tax Revenues" section of the report for the prior-year (e.g. the 2017 column is from the 2018 report), by which time the "Tax Revenues" for that year are largely known (although still subject to further revision in later years). The "Tax Revenues" quoted are Exchequer Tax Revenues, and do not include Appropriations-in-Aid ("A–in–A") items, the largest being Social Security (or PRSI) which for 2015 was €10.2 billion, and other smaller items. Irish Personal Income tax, and the two main Irish consumption taxes of VAT and Excise, have consistently been circa 80% of the total Irish Exchequer Tax Revenue, with the balance being Corporate tax. ## International comparisons Comparisons of Ireland's tax system and international tax systems are complicated by two issues: Distortion of Ireland's GDP. Ireland's GDP is artificially inflated by the BEPS flows of Ireland's Multinational tax schemes. In 2018, Eurostat found 25% of Ireland's 2010-14 GDP was BEPS flows (no taxable impact). In Q1 2015, Apple restructured its Irish BEPS tools, which required Irish 2015 GDP to be restated by 34.4%. In February 2017, the Central Bank of Ireland replaced Irish GDP with a new metric, GNI\*, to remove the distortion; 2017 GDP was 162% of 2017 GNI\* (EU–28 2017 GDP was 100% of GNI). Effect of deductions and provisions. While Ireland's headline rates of taxation can be compared internationally, the effect of various tax deductions and provisions can materially change the net effective rate of taxation in a given area. The most dramatic, and controversial example of this is the difference between Ireland's headline corporate tax rate of 12.5%, and its effective corporate tax rate of under 4% (see below). However, this issue also appears in VAT and in the effect of child benefit transfers on tax wedge estimates of the net tax on take-home pay. Key sources for comparison are the OECD Tax Database and the OECD Ireland Tax Bulletins. The Department of Finance has a Tax Policy Group which up until 2014, published documents that compared Ireland's taxation system internationally, including the main tax policy differences with other OECD countries. ## Total Gross Tax-to-GDP ratio From 2000 to 2014, Ireland's Total Gross Tax-to-GDP ratio was 27–30%, versus the OECD average of 33%, and EU–27 average of 36%. In October 2013, the Department of Finance Tax Policy Group, highlighted the distortion of Irish GDP impacted this metric, and Ireland's Tax-to-GNP ratio at 36% was above the OECD average, and in line with the EU–27 average. However, since Apple's 2015 restructuring, Ireland's headline Tax-to-GDP ratio had fallen to the bottom of the OECD range at under 23%. Using 2017 GNI\* (Irish 2017 GDP is 162% of Irish 2017 GNI\*), Ireland Tax-to-GNI\* ratio is back to 33%, in line with the OECD average. In 2017, Eurostat noted that Irish GNI\* still contained BEPS tool distortions, and thus the Irish Tax-to-GNI\* ratio is understated. ## Income tax (PAYE and PRSI) The OECD's 2018 Taxing Wages shows Ireland's tax wedge for labour income, which is the total tax (PAYE and EE and ER–PRSI less SS Benefits) paid on Irish wages by both the employee and employer, as a % of the total cost of labour to the employer (PAYE and ER–PRSI), is one of the lowest in the OECD. Of the 35 OECD members in 2017, the average Irish single-worker cost 27.2% in taxes versus the OECD average of 35.9% (ranked 29th–lowest), and the average Irish married worker cost 10.8% in taxes versus the OECD average of 26.1% (ranked 31st–lowest). The OECD's 2018 Taxing Wages shows Ireland's employee tax on wages, which is the total tax (PAYE and EE–PRSI less SS Benefits) paid by Irish employees, as a % of their gross wages, is also one of the lowest in the OECD. Of the 35 OECD members in 2017, the average Irish single-worker paid 19.4% versus the OECD average of 25.5% (ranked 28th–lowest), and the average Irish married worker paid 1.2% versus the OECD average of 14.0% (ranked 33rd–lowest). In relation to the single worker, the OECD noted that a driver of the lower Irish rate is that EE–PRSI (or employee social security contributions) are lower in Ireland versus the OECD average. PAYE and ER–PRSI accounted for 87% of the Irish tax wedge for labour income, whereas for the OECD average it was 77%. In relation to the married worker, the OECD noted the additional effect of Irish child benefits and provisions which reduced the married-worker employee tax by 16.4%, whereas for the OECD average it was 9.8%. Ireland's lower EE–PRSI, and higher child benefits, have been noted in other studies. Aside from lower employee social security levies (e.g. EE–PRSI), the most distinctive aspect of Ireland's personal tax system is the level of Progressivity, as defined by the ratio of the employee tax (or tax wedge for income) at 167% of the average wage, to employee tax at 67% of the average wage. In October 2013, the Department of Finance Tax Policy Group, highlighted that Ireland has the most progressive personal tax system in the OECD. By September 2016, the Irish Tax Institute showed that Ireland was the 2nd most progressive personal tax system in the OECD. The progressive nature of Ireland's personal tax system is also apparent in the distribution of Irish personal tax. In October 2013, the Department of Finance Tax Policy Group, highlighted the following personal tax (PAYE and EE–PRSI), statistics from the Irish Revenue Commissioners for the 2012 tax year: Top 1% of earners, earned over €200,000 in income and paid 20% of personal tax. Top 5% of earners, earned over €100,000 in income and paid 40% of personal tax. Top 23% of earners, earned earn over €50,000 in income and paid 77% of personal tax. Bottom 77% of earners, earned less than €50,000 in income and paid 23% of personal tax. The above format of the Tax Policy Group has never been reproduced, in April 2018, the OECD and the Irish Revenue Commissioners disclosed that in 2015: Top 1% of earners, earned over €203,389 in income and paid 19% of personal tax. Top 10% of earners, earned over €77,530 in income and paid 61% of personal tax. ## Consumption tax (VAT and Excise) Irish headline VAT is in line with EU VAT rates (see graphic). The OCED Revenue Statistics 2017 – Ireland, ranks Ireland as being below the OECD average for effective VAT (22nd–lowest out of 35 OECD countries), but in line with the OECD average for overall Consumption taxes (e.g. VAT and Excise combined), ranking 16th of out 35 OECD countries. In October 2013, the Department of Finance Tax Policy Group, highlighted that the distortion of Irish GDP impacted this metric and that Ireland's Consumption Tax as % of GNP ratio at 12%, and VAT as % of GNP ration at 8%, was at the EU–27 average for both metrics. ## Corporate tax (CT) Ireland's taxation system is distinctive for its low headline rate of corporation tax at 12.5% (for trading income), which is half the OECD average of 24.9%. While Ireland's corporate tax is only 16% of Total Net Revenues (see above), Ireland's corporate tax system is a central part of Ireland's economic model. Not only do foreign multinationals pay 80% of Ireland's corporation tax, but they also directly employ 10% of the Irish labour force, rising to 23% when Public Sector, agri and finance jobs are excluded and pay 50% of all Irish salary taxes using the same metric; in 2016, they were 57% of all Irish non-farm OECD value-add (see multinational economy). A source of controversy is the effective tax rate of Ireland corporation tax system, of which the independent evidence is that it is less than 4%, and as low as 0.005% for major U.S. multinationals (see Irish effective corporate tax rate). Ireland's Corporate Tax System has seen Ireland labelled a tax haven, and in June 2018, academics estimated that Ireland was the largest global tax haven. Ireland's reputation as a tax haven for foreign multinationals to avoid global taxes contrasts with the fact that Ireland's overall tax receipts are in line with the EU and OECD averages (when properly adjusted using Irish GNI\*, and not the distorted Irish GDP). ## Income tax Income tax is charged in respect of all property, profits, or gains. Since 2002, Ireland has operated a tax year coinciding with the calendar year (1 January to 31 December). The change coincided with the introduction of the euro in Ireland. For administrative purposes, taxable income is expressed under four schedules: Schedule C: public revenue dividends (i.e. coupon payments on government debt) Schedule D Case I: Profit arising from any trade, or from quarries, mines, works, tolls, fairs, bridges, and railways Case II: Profit arising from any profession not contained in any other schedule Case III: Interest on money or debts, annuities, discounts, profits on government debt not covered in schedule C, interest on certain government debt, income on securities outside the state not covered in schedule C, and income from possessions outside the state Case IV: Tax in respect of any annual profits or gains not covered by any other case or schedule. There are also specific types of income specified by law to be taxed under case IV. Case V: Tax in respect of rent or receipts from any easement Schedule E: Income from public offices, employment, annuities, and pensions. Schedule F: Dividends from Irish companies. ## Rates of income tax Since 1 January 2015, the tax rates apply as follows: There are 2 tax brackets, 20% (the standard rate) and the balance of income at 40% (the higher rate). The brackets depend upon the individual's category. The €43,550 amount may, for married couples, be increased by the lesser of: €25,550 or the income of the second spouse. This brings the total maximum standard rate band for a married couple to €69,100, twice the single person's band. The increase is not transferable between spouses. Irish income tax brackets (2019) The €44,300 amount may, for married couples, be increased by the lesser of: €26,300 or the income of the second spouse. This brings the total maximum standard rate band for a married couple to €70,600, little less than twice the single person's band. The increase is not transferable between spouses. ## Tax credits A taxpayer's tax liability is reduced by the amount of their tax credits, which replaced tax-free allowances in 2001. Tax credits are not refundable in the event that they exceed the amount of tax due, but may be carried forward within a year. A wide range of tax credits are available. A few are awarded automatically, while others must be claimed by taxpayers. The principal tax credit is the personal tax credit, which is currently €1,650 per year for a single person and €3,300 per year for a married couple. A widowed person in the year of bereavement, or for as long as they have dependent children, may claim the €3,300 credit as well; a higher credit is available to widowed parents during the five tax years following the bereavement. The PAYE tax credit, which is also €1,650, is awarded to employees and others who pay tax under the Pay as you earn system (further details below), to compensate them for the time value of money effect; their tax is deducted from their incomes during the year, whereas the self-employed pay near the end of the year. The credit may not exceed 20% of the recipient's income during the year and it is not transferable between spouses. ## Rules of residence A person resident and domiciled in Ireland is liable to Irish income tax on their total income from all sources worldwide. In this sense, a person who spends: 183 days or more in Ireland during a tax year, or an aggregate of 280 days in the current and preceding tax year is considered to be resident. Presence in Ireland of not more than 30 days in a tax year is ignored for the purposes of the two year test. Since 1 January 2009, a person is treated as present in Ireland for a day if present at any time during the day; before this, a person was only treated as present if he or she was present at midnight, a rule which was nicknamed the "Cinderella clause". A person may also elect to be resident in Ireland in a year in which he arrives in Ireland, once he can satisfy Revenue that he intends to remain there for the next tax year. A person who is resident in Ireland for three consecutive years becomes ordinarily resident, and ceases to be ordinarily resident after he has been non-resident in Ireland for three consecutive years. A person is domiciled in Ireland if born in Ireland; a person who has "demonstrated a positive intention of permanent residence in \[a\] new country" ceases to be domiciled in Ireland. A person who is not an Irish resident but is ordinarily resident in Ireland is liable to tax on all Irish and foreign-sourced income in full, except for income from a trade, profession, office, or employment, the duties of which are entirely exercised outside Ireland, and on foreign income under €3,810 per year. A person who is resident in Ireland, and is either ordinarily resident or domiciled in Ireland, but not both, is liable to tax on all Irish income in full, and on such foreign income as is remitted to Ireland. A person who is neither resident, ordinarily resident, nor domiciled in Ireland is taxable on all Irish sourced income in full, and on foreign sourced income in respect of a trade, profession, or employment exercised in Ireland. ## Exemption limits and marginal relief A person aged 65 or over during the tax year is exempt from income tax if his or her income is under €18,000 per year. A married couple with income under €36,000 per year is also exempt if either spouse is aged 65 or over or reaches 65 during the year; the exemption amount is increased by €575 for each of the couple's first two dependent children and by €830 for each subsequent child. A person or couple earning slightly over the limit may claim what is known as marginal relief. In this case, income over the exemption limit is charged to tax at a flat rate of 40%. A person or couple may choose to be taxed under marginal relief or the regular tax system, and will be granted whichever system is more beneficial, including retroactively. ## Sources - Taxation in the Republic of Ireland · Wikipedia: https://en.wikipedia.org/?curid=1973092 Source: Wikipedia contributors — https://en.wikipedia.org/?curid=1973092&oldid=1381569649 Licence: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation notice: Reformatted for XPay; the source may be abridged, restructured or translated. Consult the cited revision for the original.