The Irish Tax System Explained

The Irish tax system is different from most EU countries and works on what is called a tax credit system.

 

When you first register your employment in Ireland you will be issued with a Tax Credit Certificate, which can vary based on your personal circumstances.

For example, a single person will receive a tax credit for €3,300, whereas a single parent, or a married person with just one person working will receive a tax credit of €4,950.

 

Once they have established your tax credit, this will be divided by the number of times you will be paid, based on you position for the present tax year.

 

So, for example if you get paid monthly, and you start your new position in Ireland in the beginning of April, you will receive 9 pay cheques in the present tax year. So, your tax credit of €3,300 will be divided by 9, resulting in a monthly credit of €366.66.

 

Now when your monthly tax is calculated, €366.66 will be deducted from your tax bill and the remainder is what you will actually owe.

 

Below is an example of a tax calculation for a single person, earning €25,000 per annum, starting work in Ireland for the first time in April and being paid on a monthly basis.

Annual salary

€25,000

Monthly salary

€2,083.33

Gross  Monthly income

 

€2,083.33

Tax payable

@ 20%

€416.66

Total tax liability

€416.66

Personal tax credits (less)

– €330.00

Net tax due

€86

PRSI

€83.33

Universal social charge

€35.66

Total deductions

  

€205.00

Monthly disposable income

€1,878

Based on the above example of a single person earning €25,000 per annum, the actual tax paid each month would effectively be 4%, and total deductions which includes your health cover would be 9.8%. Resulting in a take home pay after all deductions of €1,878 per month.

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