Deposit Interest Retention Tax (DIRT), at the rate of 39% (from the 1st January 2017) is deducted at source by deposit takers, e.g. banks, building societies, Credit Unions, Post Office Savings Bank, etc. from interest paid or credited on deposits of Irish residents. For the period 1st January 2014 to the 31st December 2016 DIRT rate was 41%.
DIRT does not apply to
- Interest on deposits beneficially owned by non-residents,
- Deposits of Companies within the charge to Corporation Tax,
- Deposits of Revenue approved Pension Schemes, and
- Deposits of persons who are entitled to charitable exemption from tax.
A higher DIRT rate applied to interest earned on a deposit where the interest cannot be calculated annually or more frequently and the interest cannot be determined until it is paid. This higher DIRT rate was abolished, as and from the 1st January 2014, and the standard DIRT rate applies to any interest paid or credited on these deposits on or after the 1st January 2014.
DIRT is a final liability for income tax purposes, i.e. the payment of retention tax at the standard rate by individuals liable to income tax at the higher rate is regarded as satisfying the individual’s full liability to this tax. However, in certain circumstances, an individual will also be liable to pay PRSI in respect of the Deposit Interest received. The Universal Social Charge (USC) does not apply to Deposit Interest that has been subjected to Deposit Interest Retention Tax.
If an individual is aged 65 or over or they are permanently incapacitated, they may be entitled to a refund of DIRT. Forms are available to apply DIRT Exempt Accounts.