Withholding Tax - Foreign Deposits

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Freelance

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We are increasingly seeing foreign deposit accounts being touted as a solution to the miserable deposit rates being offered here. Questions about Withholding Tax as it applies to Deposit Interest received from banks in jurisdictions with which Ireland has a double taxation agreement appear here almost daily.

Would it be appropriate to have a key post covering this, and if so is there anybody competent and willing to knock it together ?
 
Interested in this too as saw some conflicting information. I remember reading somewhere that the double taxation maxes out at a certain amount, 15% iirc? If so, then you would be liable to paying essentially an extra 5% DIRT as it would not fully cover the 20% withholding tax (if you did not get the reduced rate). If you did get the reduce rate then you'd get the double taxation 10% on the withholding and then just pay the remaining 23% (Well 33% but the 10% would be a credit).

And does double taxation even cover DIRT? Or is it just PAYE income? Open to correction anyway!
 
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Freelance said:
We are increasingly seeing foreign deposit accounts being touted as a solution to the miserable deposit rates being offered here. Questions about Withholding Tax as it applies to Deposit Interest received from banks in jurisdictions with which Ireland has a double taxation agreement appear here almost daily.

Would it be appropriate to have a key post covering this, and if so is there anybody competent and willing to knock it together ?
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Good idea but does anyone have the tax expertise to write this?
 
I would appreciate any stories people have in relation to this. Its not only the taxation aspect but the practical reality of dealing with some of these banks. If its too much hassle it stops being worth it for many of us.

I have found BFF bank perfect so far and I will update when I withdraw the money.
 
What does double taxation actually mean.
I assume that the country that is taxing at source (eg Latvia) is benefitting by the relevant % rather than the source of the investment (eg Ireland).

Or is the tax money repatriated somehow to the country of the source of investment?

Is Ireland missing a trick here where we could increase our taxation income? Current deposit rates would prohibit this though.

If Ireland is considered a "tax haven" like IOM, Channel Islands etc, something is being done wrong here right now. Or is that only applicable to corporation tax.
 
Double taxation means that the income/gain is taxed twice

Generally, double taxation treaties between two states allow that the tax paid in one can be offset against the tax due in the second, so the income/gain is taxed once and not twice
 
Right, but the money that is witheld in the country where the funds are invested remain in that country right?
The invester in most cases does not get over taxed, its the country that the investor resides that loses their % cut of the tax.
So there is justification for people submitting the form to reduce or elimate the tax in the country of investment.
Its small amount of €'s in my case but it would surely add up across many investors.
 
In relation to the documentation Raisin claim they issue to negotiate the double tax agreement;

In this case with BluOr bank in Latvia.

I've opened an account but yet to deposit the money therein.

Exactly when will Raisin issue me the tax documentation to fill out and return?
 
@BrokeBroker Raisin are not going to issue you tax documentation, you've misunderstood. It's up to you to get a residency certificate from the revenue and give to raisin.
 
BrokeBroker said:
Cool.

Just out of curiosity, did you open an account with BluOr?
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Yes I have 20K in with blueOR at the 6 month rate. Not bothering with the residency certificate as I don't care if it's Irish revenue or Latvian revenue getting the tax take
 
jpd said:
Double taxation means that the income/gain is taxed twice

Generally, double taxation treaties between two states allow that the tax paid in one can be offset against the tax due in the second, so the income/gain is taxed once and not twice
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And we can avail of that, provided we forward the letter of tax residence to Raisin, right?

Otherwise, we may be liable to pay tax twice?

This has come up in so many threads (I think I had a post attempting to get clarity on this deleted), but no definitive clarity given.

Fail to provide the letter of tax residence and the double tax agreement is not recognized/implemented, and we pay tax twice?

.........

I ask as I've applied on revenue.ie to get the tax certificate and received no acknowledgement of request nor response of any kind.
Made an inquiry and was given a completely irrelevant response.
And the contact phone number for revenue doesn't seem to have a general-inquiries line?

Has anyone successfully got a letter-of-tax-residence from revenue yet, and how long did it take to process from your time of applying for it through revenue.ie?
 
Unlike most countries Ireland applies DIRT tax to interest and Credit Union dividends at the rate of 33% on or after January 2020 (various higher rates applied before that). Its called a 'final liability tax' and is not subject to USC but you are liable for PRSI at 4% if over 16 and under 66.

If your EU deposit interest is paid gross you are obliged to return it and it is taxed at the same rate as Irish deposit i.e. 33% and PRSI.

Non-EU deposit interest is taxed at your marginal tax rate and PRSI apllies.
 
BrokeBroker said:
Has anyone successfully got a letter-of-tax-residence from revenue yet, and how long did it take to process from your time of applying for it through revenue.ie?
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The letter of tax residency is sent to your account within a few weeks.
 
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WizardDr said:
Unlike most countries Ireland applies DIRT tax to interest and Credit Union dividends at the rate of 33% on or after January 2020 (various higher rates applied before that). Its called a 'final liability tax' and is not subject to USC but you are liable for PRSI at 4% if over 16 and under 66.

If your EU deposit interest is paid gross you are obliged to return it and it is taxed at the same rate as Irish deposit i.e. 33% and PRSI.

Non-EU deposit interest is taxed at your marginal tax rate and PRSI apllies.
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So all deposit interest earned outside Ireland but within the EU is liable to tax at 37% (33% DIRT + 4% PRSI) instead of 33%. I would imagine that many Irish customers of Raisen, Advanzia, Lightyear etc are not aware of this.

Is there somewhere on Revenue's website that this is covered?
 
James5 said:
So all deposit interest earned outside Ireland but within the EU is liable to tax at 37% (33% DIRT + 4% PRSI) instead of 33%. I would imagine that many Irish customers of Raisen, Advanzia, Lightyear etc are not aware of this.

Is there somewhere on Revenue's website that this is covered?
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My understanding was that the PRSI element only kicks in if you are a chargeable person earning over €5k in interest, but would like to be sure.
 
podgerodge said:
My understanding was that the PRSI element only kicks in if you are a chargeable person earning over €5k in interest, but would like to be sure.
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OP believes the PRSI charge kicks in if you are using Form 11 for any reason, whether under the €5K PAYE limit or not, per post in separate thread here. I think we'd need someone here with experience & full knowledge to confirm however.
 
I use Form 11 due to ESPP and I get charged 4% PRSI tax on top of 33% DIRT for Deposits outside of Ireland. I'm actually PAYE and I don't earn more than 5K€ interest so I believe this is related with Form 11 usage.
 
barbaros said:
I use Form 11 due to ESPP and I get charged 4% PRSI tax on top of 33% DIRT for Deposits outside of Ireland. I'm actually PAYE and I don't earn more than 5K€ interest so I believe this is related with Form 11 usage.
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So essentially there is a cost (tax of 4% PRSI) for the essential usage of Form 11 for other purposes (eg ESPP), even if non-PAYE income is less than €5K. That 4% could equate to up to €200 (if earning €5k in foreign interest).

Doesn't seem right. Does anyone know if this 4% can be claimed back somehow?
 
@JamesS

I have asked the scope section of the Department of Social Protection for an answer. As the vast majority of taxpayers do not file a tax return, its clear that Revenue have not been collecting it except in the case of the minority (c. 250,000) who file a Form 11.

Buts lets wait until I get the answer - Revenue are vague.
 
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