IRELAND Law and Practice Contributed by: Amelia O’Beirne and Trevor Glavey, A&L Goodbody
tance basis, the individual’s non-Irish source income and gains are taxable only to the extent that they are remitted to Ireland. Where the individual has employ - ment income from a non-Irish employment and per - forms duties related to that employment in Ireland, the remittance basis of taxation will not apply to such employment income. For 2026, the standard rate of income tax is 20% and the marginal rate is 40%. In terms of the thresholds at which the marginal rate applies, currently for a single person the first EUR44,000 of the individual’s income is taxed at 20%, with the balance taxed at 40%. For a married couple with one spouse with income, the first EUR53,000 is taxed at 20%, with the balance taxed at 40%. Various credits, allowances and reliefs are available to reduce an individual’s income tax liability (eg, a personal tax credit of EUR2,000 applies for the tax year 2026). Separate to income tax, a universal social charge (USC) also applies in Ireland. If a person’s total income exceeds EUR13,000, subject to certain exceptions, USC applies to the individual’s full income. For 2026 the USC rates are as follows: • first EUR12,012 of income is taxed at 0.5%; • next EUR16,688 of income is taxed at 2%; • next EUR41,344 of income is taxed at 3%; and • balance of income is taxed at 8%. Ireland also operates a system of pay-related social insurance (PRSI). PRSI is a mandatory social insur - ance contribution paid by employers, employees and self-employed individuals at varying rates, subject to certain exemptions. There are 11 different PRSI contri - bution classes which determine an individual’s liability to PRSI. See 3.5 Employment Income for the rates of employer and employee PRSI. 2.4 Taxation of Non-Resident Individuals Individuals who are not resident or ordinarily resident in Ireland are subject to Irish income tax on their: • Irish source income; and • income from an Irish public office and from a trade, profession or employment to the extent that such
trade, profession or employment is exercised, or duties in respect of it are carried out, in Ireland. Subject to certain exceptions, USC also arises for non-resident individuals with relevant emoluments and/or relevant income within the charge to Irish income tax. USC is generally not payable in respect of, for example, employment income of a non-resident individual that is attributable to duties exercised whol - ly outside Ireland, where there is no charge to income tax in Ireland. With respect to PRSI, the general rule is that an employee pays PRSI in the country where they car - ry out the duties of their employment, regardless of where the employer is located. Where an employee’s duties of employment are carried out both in Ireland and abroad, only that portion of the employee’s remu - neration that relates to duties carried out in Ireland is liable to PRSI in Ireland. An employee may also be liable to pay PRSI on their income in another jurisdic - tion. For this reason, Ireland has entered into a number of social security agreements with other jurisdictions to ensure that, in these circumstances, PRSI is only paid in one country. 2.5 Tax Residence of Legal Entities A company incorporated in Ireland is generally regard - ed as tax-resident in Ireland (referred to as the Incor - poration Test). The Incorporation Test is dis-applied where an Irish incorporated company is, under the terms of one of Ireland’s DTAs, regarded as tax-resi - dent in the DTA partner jurisdiction and not tax-resi - dent in Ireland. Where a company is dual resident in both Ireland and a DTA partner jurisdiction, it is necessary to have regard to the tie-breaker test in the relevant DTA. When it comes to the applicable tie-breaker test, the specific tax treaty should always be consulted. Depending on the DTA, residence may be determined by reference to the place of effective management of the relevant company or by mutual agreement between the com - petent authorities of Ireland and the DTA partner. A foreign incorporated company can establish Irish tax residence by having its central management and control (CMC) exercised in Ireland. In this respect,
191 CHAMBERS.COM
Powered by FlippingBook