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Deposit Interest Retention Tax

Information

Financial service providers such as banks, building societies and post offices, offer accounts where you can save a sum of money (a deposit) for which they will pay you an annual rate of interest in return, usually as a percentage of the deposit.

The interest you receive is subject to a tax called Deposit Interest Retention Tax (DIRT).

From 1 January 2014, DIRT is charged at 41% on all interest payments. For 2013, the rates were 33% for ordinary deposit accounts and 36% for long-term deposit accounts. You can see historic DIRT rates on revenue.ie.

The tax is deducted by the bank or other deposit-taker before the interest is paid to you. If you request it, you are entitled to be given a statement of the amount of DIRT deducted from your interest.

DIRT is a final liability for income tax purposes. This means that if you have paid DIRT you do not have to pay any further income tax or Universal Social Charge on the interest but it is declared as income if you are making a tax return. However in some circumstances you may have to pay PRSI on deposit interest you have received.

DIRT does not apply to interest on deposits owned by:

  • Companies that are liable to corporation tax
  • Charities
  • People not resident for tax in Ireland (see also below)
  • Revenue-approved pension schemes

Exemptions and refunds

Certain people may qualify for a refund of DIRT or may have their deposit interest paid without the deduction of DIRT. You must apply to have your deposit interest paid without the deduction of DIRT - see 'Where to apply' below.

People aged over 65

You can get your deposit interest paid without the deduction of DIRT or you can claim a DIRT refund, if you are over 65 and:

  • Your income (including your spouse or civil partner's income) is less than the low income exemption limits for people aged over 65 or
  • Your tax liability (including your spouse or civil partner's income) for the year is less than your tax credits (including your spouse's) for that year.

In general, joint accounts where one of the account holders is aged 65 or over will only qualify for the refund of DIRT if the other account holder is that person’s spouse or civil partner.

However, if another person, such as your son or daughter, has the authority to operate your bank account on your behalf, and is named as an account holder for this purpose only, you will continue to qualify for the refund of DIRT provided you are the beneficial owner of the account. In this case, when claiming a refund of DIRT, you must include a declaration that you (not your child) are entitled to all of the interest paid in respect of the deposit.

People with disabilities

You can get your deposit interest paid without the deduction of DIRT or a DIRT refund, if you are:

  • Permanently incapacitated from maintaining yourself and
  • Your tax credits (including your spouse's) for the year exceed the tax that would be chargeable on your (and your spouse's) income for the year

You can get more information on "DIRT-free Deposit Accounts for Permanently Incapacitated Individuals - DE2" from Revenue.

Non-resident accounts

If you are not resident in Ireland for tax, you may get a refund of any Deposit Interest Retention Tax deducted from your Irish deposit interest. To get a refund of DIRT, Ireland must have a double taxation agreement with the country you are resident in. DIRT will be refunded under the terms of that agreement. Fill in IC5 form (pdf) to apply for a refund of DIRT.

If you are not resident in Ireland you may get your Irish deposit interest paid without the deduction of DIRT. A non-resident person does not have to be a resident of a country that has a double taxation agreement with Ireland to apply for a DIRT exemption. You should contact your financial institution to find out if you can be exempt from paying DIRT. You will have to complete a Non-Residence Declaration. You must notify them if you become resident again.

Credit unions

From 1 January 2014 all credit union share dividend and deposit interest paid to members is subject to DIRT, with the exception of dividend or interest paid to members who are exempt from DIRT (certain people over aged 65 and certain people who are permanently incapacitated). Before 2014 certain types of credit union accounts were not subject to DIRT.

Special term share credit union accounts opened in the period 1 January 2002 to 15 October 2013 allowed a member of a credit union to opt to hold shares in the account for a minimum term of either 3 or 5 years. A tax exemption applied to dividends from these accounts. This tax exemption was:

  • For the first €480 per annum of dividends where the funds are invested for a minimum of 3 years, and
  • For the first €635 per annum of dividends where the funds are invested for a minimum of 5 years.

These accounts can no longer be opened from 16 October 2013. However if you had one of these accounts and the funds in the account mature after 16 October 2013 the tax exemption on dividends is still available. The remainder is liable to the appropriate rate of DIRT (41% from 1 January 2014).

How to apply

Refund of DIRT

If you are aged over 65 or a permanently incapacitated person or a trustee of a special trust for a permanently incapacitated person, fill in form 54D (pdf) to apply for a refund of DIRT. Send the completed form to your local Revenue office.

You will need to get a Certificate of Interest from your bank, building society, credit union, etc, and include this with your application.

Exemption from DIRT

You can apply to have your deposit interest paid without the deduction of DIRT:

  • If you are aged over 65 years of age you must complete form DE1 (pdf) and return it to your financial institution (not Revenue)
  • If you are a permanently incapacitated person or a trustee of a special trust for a permanently incapacitated person, you must complete form DE2 (pdf) and return it to Revenue

Read Revenue's leaflet on claiming refunds or exemptions (pdf).

Page updated: 5 December 2014

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If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.