Imposition of tax

Where an individual is a resident in the Republic, tax is imposed on income accruing or arising from sources both within and outside the Republic.

Where an individual is not a resident in the Republic, tax is imposed on income accruing or arising only from sources within the Republic.

Resident in the Republic is an individual who is present in the Republic for a period exceeding 183 days in a tax year.

Tax rates

Taxable

Income

Tax

Rate

Tax

Cumulative

Tax

€

%

€ 

€ 

                0 - 19.500

0

0

0

19.501 - 28.000

20

1.700

1.700

28.001 - 36.300

25

2.075

3.775

 36.301 and over

30

Exemptions

The following are exempt from income tax:

Widows pension granted under schemes approved by the Commissioner of Income Tax

The whole

Amount

Gratuity or lump sum received on retirement or commutation of pension or as a result of death or bodily injury

The whole

Amount

Lump sum repayment from life insurance schemes or from approved provident funds

The whole

Amount

Interest income.

Interest income arising in the ordinary course of business, including interest closely connected with the carrying on of the business, is not considered as interest but trading rofit and is not exempt

The whole

amount

Dividend income

The whole

Amount

Remuneration from any office or employment exercised in the Republic by an individual whose residence was Outside the Republic before the commencement of the employment.

The exemption is applicable for a period  of three years from 1^st January following the year of commencement

of the employment

20% of the remuneration

or .8.543,01

(whichever is

the lower)

Gains from disposal of securities

The whole amount

Deposits with the Housing Finance

Corporation (the annual deposits cannot exceed 25% of the gross income)

Only for schemes that were in existence on 30/4/03

40% of the deposits

Remuneration from the rendering outside the Republic of salaried services to a non-resident employer or to a permanent establishment outside the Republic of a resident employer for a total aggregate period in the year of assessment of more than 90 days

The whole

Amount

Profits from a permanent establishment maintained outside the Republic

(subject to certain conditions)

The whole

Amount

Deductions

The following are deducted from income:

Interest relating to the acquisition of fixed assets used in the business

The whole amount

Expenses for letting of buildings

20% of the rental income

Interest in respect to the acquisition of a building for rental purposes

The whole

amount

Subscriptions to trade unions or professional bodies

The whole

Amount

Expenditure for the maintenance of buildings under preservation order

(subject to certain conditions)

Up to €512,58,

€854,30 or €939,73

per sq. m. (depending on the size of the building)

Donations to approved charitable organisation

(with receipts)

The whole

amount

Non-deductible expenses

The following expenses are not tax deductible:

Business entertainment expenses including hospitality expenses of any kind which are incurred for the purpose of the business

amount in

excess of 1%

of the gross

income or

€17.086,01

(whichever is

the lower)

Private motor vehicle expenses

The whole

Amount

Professional tax

The whole

amount

Immovable property tax

The whole

amount

Interest payable or deemed to be payable in relation to the acquisition of a private motor vehicle, irrespective

of whether it is used in the business or not, or other asset not used in the business. This restriction is lifted after

7 years from the date of purchase of the relevant asset

The whole

amount

Contributions to the Social Cohesion Fund

The whole

amount

Capital Allowances

Capital allowances available for companies are also available to individuals who prepare accounts.

Losses

Carry forward of losses

Losses are carried forward indefinitely. Losses for the years 1997 onwards, which have not been offset against profits arising up to the year 2002, will be

carried forward to 2003 and subsequent years without time restriction.

Where a person, including a partnership, converts his business into a limited liability company, any unrelieved losses can be transferred to the new company.

Loss of a permanent establishment outside the Republic

Losses arising from a permanent establishment maintained outside the Republic can be offset against profits arising in the Republic. However, when a profit arises from such a permanent establishment, an amount equal to the losses that have been utilised in the past against profits arising in the Republic, will be included in the taxable income.

Personal allowances

The following are deductible from income:

Social insurance contributions, contributions to approved provident and pension funds, the General Health

Plan, contributions to medical or other approved funds as well as insurance premiums in respect of the life of the

claimant

The whole

amount up

to 1/6 of the

taxable

income

before this

allowance

• the annual life insurance premium is restricted to 7% of the insured amount

• life insurance policies, in respect to the life of the claimant’s spouse, which were in existence up to the 31 December 2002 and for which the claimant

was receiving a tax allowance, will continue to be deductible by the claimant

• in the event of cancellation of a life insurance contract within 6 years from the date it was entered into, part of the life insurance premiums already given as an allowance will be taxable as follows:

- cancellation within 3 years

30%

- cancellation between 4 to 6 years

20%