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 2012, DIRT is charged at 30% (was 27% in 2011) for payments made annually or more frequently. The tax is deducted by the bank or other deposit-taker before the interest is paid to you. DIRT will be charged at 33% for payments made less frequently.
If you request it, you are entitled to be given a statement of the amount of DIRT deducted from your interest.
You do not have to pay any further tax on the interest but it is declared as income if you are making a tax return.
Exemptions and refunds of DIRT
Since 2007, your financial institution can pay your interest on deposits without deducting DIRT. You must apply to have your deposit interest paid without the deduction of DIRT - see 'Where to apply' below.
People 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 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
Others who may qualify for an exemption from DIRT or a DIRT refund are:
- The trustees of a trust fund for a permanently incapacitated person
- Charities
- People not resident for tax
Credit Unions
When you save money with a credit union you do this by buying shares in the credit union. Each year you receive a dividend which will be a percentage of the value of your shares. The way the dividend is taxed depends on the type of credit union account that you have: a regular share account or a special share account. You can check with your credit union if you are not sure which type of account you have.
If you have a regular share account, DIRT is not deducted by the credit union. It is your responsibility to declare the dividend in your annual tax return.
If you have no tax liability on your income, you will not be taxed on your dividend. For this reason a regular share account is a good choice if you are not liable to pay income tax but you don’t meet the requirements above to obtain a refund of DIRT that has been deducted.
If you pay income tax at the 41% rate, then this rate will also apply to the dividend you receive on a regular share account and it may be preferable to open a special share account.
If you have a special share account, your credit union will deduct DIRT from your dividend. The dividend is taxed at 30%.
Credit Union - Special Term Accounts
Special Term Accounts are deposit accounts that have a set term and have limits to the amounts that can be deposited in them. They can be medium term or long term. DIRT is charged at 30%. However, you can hold a dividend of €480 tax-free with a medium term account or €635 tax-free with a long term account, after which you will be charged DIRT at 30%.
Non-resident's 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 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 in order 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.
How to apply
Refund of DIRT
If you are 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 over 65 years of age you must complete form DE1 (pdf) and return it to your financial institution
- 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
Where to apply
Lo-call telephone numbers for Revenue regional offices are available. There are also contact details for the Revenue offices in your region.
Language
Related Documents
- Older people's tax credits and reliefs
Special taxation arrangements apply to people aged 65 and over. Find out more. - Credit unions
Credit Unions are organisations of people that save together and lend to each other at affordable rates of interest. - Tax residence and domicile in Ireland
There is a specific definition of residence for tax purposes and it depends on how many days you spend in the country. Find out more here.
Contact Us
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 9pm) or you can visit your local Citizens Information Centre.