What is DIRT?
Deposit Interest Retention Tax (DIRT), often referred to as dirt tax, is a tax deducted by Irish financial institutions from deposit interest paid or credited to the accounts of Irish residents. This means that any interest payments you receive on your savings are subject to DIRT.
What constitutes a financial institution?
- a licensed bank of any of the European Union (EU) Member States
- a building society of any of the EU Member States
- a trustee savings bank
- the Post Office Savings Bank
- a credit union.
Which other taxes may apply?
In some circumstances, you may also have to pay Pay Related Social Insurance (PRSI) on the interest you receive. Universal Social Charge (USC) does not apply to deposit interest.
How do you declare DIRT?
You must include any deposit interest you received in your 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 a Pay As You Earn (PAYE) worker.
If you are self-assessed
You should include any DIRT on your Form 11 in Section F ‘Income from fees, covenants, distributions’. Use Revenue Online Service (ROS) to submit your Form 11.
If you are a PAYE taxpayer
You should include any DIRT on your Form 12 under ‘Irish Deposit Interest’. You can submit your Form 12 online through PAYE Services on Revenue.ie. 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.
How much is DIRT: What is the current DIRT rate?
As of 2020, the tax rate for DIRT stands at 33% of your total interest. The DIRT rates for previous years are:
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.
If you are a higher rate taxpayer or you have not made a timely return, a DIRT rate of 40% will apply.
Who is exempt from DIRT?
You can receive interest without paying DIRT (DIRT-free account) in certain conditions. To do this, you must complete a declaration form stating that you, your spouse or civil partner are:
- 65 years of age or over when making the declaration. In order to be exempt from DIRT over the age of 65, your total income for the year, including the interest, must be below the annual exemption limit.
- permanently incapacitated due to a physical or mental disability.
If you are a trustee of a special trust for permanently incapacitated individuals, you can apply for an exemption from DIRT. You must be the holder of this account. The trust must meet the following conditions:
- it is set up only for the benefit of one or more permanently incapacitated persons
- the funds of the trust are from subscriptions given by the general public
- the specified incapacitated person(s) must own the funds in the account.
Forms to complete
If you are over 65 years of age, complete a Form DE1 and send it to your financial institution.
If you are permanently incapacitated, complete a Form DE2 and send it to your Revenue Office. We will tell your financial institution that you are exempt from paying DIRT.
You will need a separate form for each account you hold. These forms are available from your financial institution. Should your personal circumstances change, it may affect your exemption from DIRT. You can find out more about how a change in circumstances affects this tax on Revenue.ie.
Can you claim a DIRT refund?
At the end of the year you may be entitled to claim a refund of DIRT from Revenue.
You may be due a refund because:
- you are now over 65 years of age
- your income went temporarily over the exemption limit
- you have become incapacitated
- it is the first year that you successfully applied for a DIRT exemption, but the financial institution had already deducted DIRT.
If this is the case, you should complete a Form 54 Claims and send it to your Revenue Office. If they accept your claim they will send you the refund.
If you are a first-time buyer you can apply for a DIRT refund. New schemes have been introduced to help first-time buyers with the cost of buying or building their first home. These schemes are the:
- DIRT First-Time Buyers Relief
- Help to Buy (HTB) incentive.
Non-resident account holder
You may claim a refund of some or all of the DIRT you paid if both of these conditions apply:
- you are not resident in Ireland for tax
- Ireland has a Double Taxation Agreement with the country you are resident in.
You must complete a Form IC5 to claim a refund.
No deduction of DIRT
If Ireland does not have a Double Taxation Agreement with the country you are resident in, you cannot get a refund of DIRT. However, you might not need to pay DIRT. Contact your financial institution to find out if this is the case. In order to avoid the deduction of DIRT, you will have to complete a declaration that you are non-resident. Your financial institution will provide this to you.