"Chargeable person", over 5k "taxable income", Form 11

@Freelance suggested I post a separate thread on this.

My question is, if you have, for example, €100k with Credit Agricole at 4.5%, that's €4,500 interest which is subject to DIRT.

If you have another €1,000, AFTER deduction of DIRT with AIB, are you over the 5k threshold and need to do Form 11 as a chargeable person, or are you under as the AIB money is not taxable , having already been charged at source.

@Freelance has told me that:
the €5,000 threshold applies to ALL deposit interest, irrespective of whether it is foreign or Irish, and also includes any other taxable non-PAYE income. So if you had €4,500 gross from Advanzia/Bunq/Britline and say €1,000 gross from AIB/BOI/PTSB you will have exceeded the €5,000 threshold for Form 11 reporting.

@RedOnion has said to another poster in a different thread:

"Interest which is fully taxed at source is not included in calculating if you breech the 5k limit."

I may be misinterpreting but would appreciate clarification.

1. Does non PAYE income which has already had DIRT taken at source count towards the 5k? Or is it no longer "taxable income"?

2. As an aside, I read today that even with ordinary deposit interest you're supposed to detail it in your PAYE tax return? Yikes I don't recall ever posting this as I thought it was all deducted at source and no need to detail it, am I alone in this ?!

How do you declare DIRT?​

You must include any deposit interest you received in your Income Tax Return. You need to enter the total interest payment before the deduction of DIRT.

The type of return you must complete depends on whether you are registered for self-assessment or are a Pay As You Earn (PAYE) worker.

If you are self-assessed​

You should include any DIRT on your Income Tax Return (Form 11) in the section ‘Irish Other Income’. Use Revenue Online Service (ROS) to submit your Form 11.

If you are a PAYE taxpayer​

You should include any DIRT on your Income Tax Return (Form 12) under ‘Irish Deposit Interest’. Use myAccount to submit your Form 12 online through PAYE Services. This only applies if your taxable non-PAYE income (including income subject to DIRT) is less than €5,000.

If you have taxable non-PAYE income of €5,000 or more, you must register for self-assessment and file a Form 11 for that year.

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My reading of this is based on this page from revenue.ie. Specifically, this wording above:

Per the last paragraph, the Form 12 option only applies where Gross Deposit Income (and any other non PAYE income) is less than €5,000. The fact that DIRT has been deducted is irrelevant, as you declare both the Gross Income and any DIRT already paid.

In the case of your example, you are confusing things by adding DIRT paid income and Non-DIRT Paid income. The correct total non PAYE income in your sample case is €4,500 from CA plus €1,492.53 being the gross interest paid to you by AIB. So the figure that you compare to the €5,000 threshold is €5,992.53.

Based on your example and the Revenue Guidance I estimate the DIRT liability as follows:

Once you post the deposit interest subject to DIRT, you get a tax credit equal to the DIRT

Deposit interest is never subject to income tax at 20% or 40% but is subject to DIRT at 33%

jpd said:

Once you post the deposit interest subject to DIRT, you get a tax credit equal to the DIRT

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Correct. This is exactly why I'm showing DIRT paid as a credit in the example above. Not sure what your point is.

jpd said:

Deposit interest is never subject to income tax at 20% or 40% but is subject to DIRT at 33%

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Read this, specifically the piece I've highlighted in red:

Interest from accounts in other European Union (EU) Member States and from non-EU countries​

If you receive interest from an account in another EU Member State, you must pay the current DIRT rate on the interest income. You must include the details of this on your annual tax return. The income will be subject to a higher rate of 40% tax if it is not returned on time.

Deposit interest from non-EU countries will be taxed at the current DIRT rate if you:

• are a standard rate taxpayer
• and
• have made a timely return.

If you are a higher rate taxpayer or you have not made a timely return, a DIRT rate of 40% will apply.

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Thanks @Freelance for that. I had been a tad concerned but I had also forgotten that this 5k is per person so our joint savings can bring us to 10k before hitting threshold (I hope,!)

Separately, per my other point, are small regular savers really all putting their gross deposit interest into Revenue every year when it's not making any difference to their liability?
I've never heard of people doing it, but I'm guilty of not, thinking it was at source so not an issue.

There is a liability to PRSI.

Only if over the 5k doing Form 11?

The question of whether or not PRSI is applied to deposit income returns made on Form 12 has been asked on a number of occasions, however I am not sure whether there has been a definitive answer.

As the main liability is discharged many people don't return deposit interest. As usual with the Revenue (same as Rent a Room) there is an obligation to file. There is a PRSI liability whether they collect it is another matter. When you file a Form 11 it is most certainly picked up and I cannot see if its declared via Form 12 that PRSI wouldn't be picked up. This €5,000 was never a tax exemption just an administrative way of reducing the numbers of tax returns obligated which is essentially self employed creatures and directors.

@Freelance that piece in red you quoted, other than late return, if you're a higher rate taxpayer you still don't pay 40% unless it's a non EU country, correct?

ie that last line relates to non EU country interest only. It's badly laid out but that's my take. I'm not sure that your worked example is correct ie for the higher rate tax payer (given we're only discussing EU banks)? But I'm confused!

Correct. Had to read the Revenue page a few times to be sure.

They have to tax all EU bank (including Irish) interest the same, or it wouldn't be legal under EU law.

podgerodge said:

Only if over the 5k doing Form 11?

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Even under 5k doing form 11, it will still automatically calculate a PRSI deduction.

Freelance said:

The question of whether or not PRSI is applied to deposit income returns made on Form 12 has been asked on a number of occasions, however I am not sure whether there has been a definitive answer.

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I do wonder why our banks deduct DIRT but not PRSI.

Because the amount of PRSI to be deducted requires a lot of information about your cumulative pay and deductions which the bank or deposit taker does not have

@Freelance do you agree on the higher rate of tax thing re my post about your worked example? It would be great if everyone was agreed on this higher rate point. Thanks.

Freelance said:

My reading of this is based on this page from revenue.ie. Specifically, this wording above:

Per the last paragraph, the Form 12 option only applies where Gross Deposit Income (and any other non PAYE income) is less than €5,000. The fact that DIRT has been deducted is irrelevant, as you declare both the Gross Income and any DIRT already paid.

In the case of your example, you are confusing things by adding DIRT paid income and Non-DIRT Paid income. The correct total non PAYE income in your sample case is €4,500 from CA plus €1,492.53 being the gross interest paid to you by AIB. So the figure that you compare to the €5,000 threshold is €5,992.53.

Based on your example and the Revenue Guidance I estimate the DIRT liability as follows:

View attachment 8158

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Can we agree on whether these figures are correct? Thanks!

The only tax on deposit interest from EU institutions is DIRT

PRSI is also due

Interest from accounts in other European Union (EU) Member States and from non-EU countries​

If you receive interest from an account in another EU Member State, you must pay the current DIRT rate on the interest income. You must include the details of this on your annual tax return. The income will be subject to a higher rate of 40% tax if it is not returned on time.

Deposit interest from non-EU countries will be taxed at the current DIRT rate if you:

• are a standard rate taxpayer
• and
• have made a timely return.

If you are a higher rate taxpayer or you have not made a timely return, a DIRT rate of 40% will apply.

Click to expand...

That's poorly laid out by Revenue, the "If you are a higher rate taxpayer.." is supposed to only clarify the sentence starting "Deposit interest from non-EU countries" - however could look like it should apply to EU as well. But we know it doesn't due to it being clear elsewhere - for example if you fill in EU interest into a form 11 it charges 37% (DIRT+PRSI) - which I think is as definitive as Revenue get.

Yes, it's understandable confusion, but @Freelance needs to update the table in their post. There is no additional liability for higher rate taxpayers on interest from EU banks, such as Advanzia/Bunq/Britline.

The situation is different for non-EU banks, or some EU products which may looks like deposits but are not.

Hi lads,

Can I ask what PRSI level I pay on savings interest if I pay PRSI at 1.5% as I am a pre-95 Civil Servant? Or is it a flat 4% rate once I fill out the form 12?

Best,

Opus 2018.

MugsGame said:

Yes, it's understandable confusion, but @Freelance needs to update the table in their post. There is no additional liability for higher rate taxpayers on interest from EU banks, such as Advanzia/Bunq/Britline.

The situation is different for non-EU banks, or some EU products which may looks like deposits but are not.

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@Freelance If you agree on the badly written Revenue point could you update the table to avoid confusion? Thanks.