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Living & Working in Ireland - 5 Tax System Facts

Tax System in Ireland

Let's face it, when it comes to packing up and going to work abroad, one of the last things on your mind is there tax system there and how you can get your mind around it. 

It's hard enough coming to terms with the tax system in your home country, never mind learning about a new system abroad. Talking of Tax, the Irish tax system is known to be one of the best in Europe (both for companies and employees) so today we will diving a little deeper for you to make living and working in Ireland that bit easier. 

By doing your homework in advance on the Irish Tax system, you can avoid unwanted surprises. Below are 5 top tax system facts for Ireland to help you get on your way.

Kicking off in Ireland

PPS Number

One of the first thing you must do when looking to live and work in Ireland is applying for your PPS number (Personal Public Service Number). 

  • Every PPS number is a unique reference number that helps you gain access to social welfare benefits and public services in Ireland. 
  • When applying for a PPS number you sit a face-to-face interview that you can book in advance even before you have gotten on the plane.
  • When starting your new job here in Ireland your employer will need your PPS number - make sure to ask whether you or your employer will register you with the tax office -  this must be done. 

Tax Credit Certificate

Once you are fully registered with the tax office, you will be given a tax credit certificate. This is basically a document that lists each of the tax credits and rate bands that you are entitled to that year. Not forgetting that it will also show your USC (Universal Social Charge) rates and thresholds. 

  • From there, your employer will be issued with a revenue payroll notification (RPN) - This helps them calculate your tax and USC when you are to be paid. 

Emergency Tax

  • For those of you who may still be waiting for your PPS number to come through to give to your employer -  you will have to deal with emergency tax. This is where a larger amount of tax will be deducted from your income than normal. 
  • This can also happen if your employer has not yet received the RPN from the tax office
  • Not to worry though, once this is sorted out you get this overpaid tax back. 

Election of Residency 

Once you arrive here in Ireland you can choose to be treated as resident (once you be a resident in Ireland for the following year). What we mean here is, you will be entitled to claim a full year's worth of tax credits even though you have not been working in Ireland for a full year. 

Income Tax Rates in Ireland

Once you start working in Ireland you will soon receive your first paycheck - you will notice that Pay As You Earn income tax is deducted (PAYE) by your employer. 

Keep in mind that the rate of tax you pay is dependant on the amount of income you earn and on your own personal circumstances. Everyone has varying circumstances, that is why we can only tell you what your salary will be gross and not net. It is up to you to calculate your own net income. 

Below are the PAYE Tax Rates for single individuals and married couples: 

Universal Social Charge (USC)

Universal Social Charge will be deducted from your income too. Just like with PAYE, the amount of USC you pay is dependant on how much you earn and your personal circumstances. 

For example: if your income is €13,000 or less, you do not have to pay USC. Below is the standard rate of USC (2019). 

PRSI (Pay Related Social Insurance)

PRSI is another deduction you will see on your payslip each time you are paid. This is your contribution to the Irish social insurance fund and most employees over the age of 16 must pay this. 

  • With regards to the amount of PRSI you pay, this is largely based on your earnings and the sector you work in.
  • Social Insurance contributions are divided into various categories known as classes or rates of contributions. The majority of employees working in Ireland are in Class A and contribute 4% of their pay to PRSI. 

TAX CREDITS 

Tax Credits can be used to reduce your overall tax liability. Two of the most common credits are the:

  • Employee Tax Credit 
  • Personal Tax Credit 

Both of these tax credits are worth €1,650 to single individuals. This then means that the total tax credit you are entitled to and that be claimed is €3,300. 

Tax Reliefs You Can Claim 

Those who live and work in Ireland are entitled to avail of a number of tax reliefs in order to reduce their overall tax bill. 

Claiming your full entitlement of tax reliefs make a lot of sense financially. (Based on our partnership with taxback.com, the average PAYE tax refund a Taxback.com customer receives is).  Below are three of the most common tax reliefs that can possibly be claimed: 

Medical & Non-Routine Dental Expenses:

Those who live and work in Ireland can claim tax relief (at 20%) on a wide range of medical and non-routine dental expenses, including: 

  • Doctors and consultant services 
  • Drugs and medicines
  • Routine and maternity care for women during pregnancy
  • Services in hospitals which are recommended or  provided by a practitioner 
  • Non-routine dental care, including crowns, veneers, tip-replacing and root canal treatment & more

Flat Rate Expenses:

A flat rate expense is a type of tax relief that is available to people in particular jobs. The purpose of this is to reduce work-related costs for employees, such as:

  • Work required uniforms
  • Tools
  • Equipment 

The amount you can claim largely depends on your occupation. For example, Airline cabin crew are entitled to claim €64 while mineworkers can claim as much as €1,312! 

There are also deductions available to doctors, engineers, plumbers, journalists, teachers, waiters, porters and more. 

Working From Home Relief:

  • Those who work from home whether it be full-time or on a part0time basis are eligible for tax relief. 
  • The reason for this is to cover possible expenses (heating, electricity and broadband for example), incurred by individuals who work from home. 
  • Employers can pay €3.20 tax-free per day to their employees to cover the additional costs associated with working from home. However, if you work from home and employer doesn't provide this payment to you, you can claim tax back instead. 
  • What's more, if your employer does reimburse you and the cost of your expenses is more than €3.20, tax can still be reclaimed on the difference. 

Understanding Your Payslip:

Having moved to live and work in Ireland, getting your first payslip can be exciting and long-awaited for moment. Of course, it may look different to what you are used to and confusion can set in. ''What does this mean?'' 

Below is an outline of the most common payslip terms & what they mean in general: 

  • PRSI Class:

Your PRSI Class is determined by your type of work and influences the amount of PRSI you pay. There are 11 different PRSI classes. The majority of employees in Ireland are Class A. 

  • Weekly/Monthly Cutt-Off:

This is the amount you can earn each time you're paid before the higher rate of tax (40%) is deducted. Every time you're paid, you pay tax at the standard rate up to yo your cut-off point. 

  • PAYE:

Pay As You Earn is the name of the system of deducting income tax, PRSI and USC from your income. 

  • Tax Credit: 

Your tax credits reduce the amount of tax that you are obliged to ay. Any unused credits are forwarded to your next pay period. 

  • Gross Pay:

Gross pay is the total amount you are paid before any deductions are made. 

  • Net Pay: 

Here you will find the total amount you are paid after-tax, PRSI and other deductions. Due to varying factors in the tax system, Careertrotter can not tell you what your Net pay for a job will be, you will need to use an online tax calculator to get this as we don't know enough about your personal circumstances to give this to you. This is why we only talk about the gross salary. 

  • Deductions:

This is the total amount of money deducted in that pay period. 

You Are Not Alone!

Once you live and work in Ireland, there is a strong possibility that you could be due a tax refund at the end of the tax year. This could be because you had to deal with medical expenses, did not use every credit you were entitled to or you simply paid too much income tax. 

Whatever the reason, you can apply for your tax refund directly with Irish Tax Authorities. 
Alternatively, you could take the headache out of that process and apply with Taxback.com who will do it all for you. 

The average Irish PAYE tax refund that a Taxback.com customer receives is €1,076 so it's worth a call.

Taxback.com's tax experts will handle all of the tricky tax paperwork for you and transfer your refund straight into your bank account. 

It's that easy!