Deposit Interest Retention Tax
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).
For 2018, DIRT is charged at 37% on all interest payments. In 2017, the rate was 39%. For 2014 to 2016, the rate was 41% and in 2013 it was 33%.
It was announced in Budget 2017 that the DIRT rate would decrease by 2% each year from 2018 to 2020 until it reaches 33%.
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. If you receive annual interest payments (or similar profit-type payments) of over €300 your bank, building society, credit union or An Post must automatically report this to Revenue.
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
- 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.
First Time Buyer (FTB) relief is available to first-time buyers who buy or self-build a house or apartment to live in as their home and may enable them to claim a refund of the DIRT paid on their savings.
If you bought or self-built a property between 14 October 2014 and 31 December 2017, you may be entitled to claim a refund of DIRT. You must have been a first-time buyer. This means that you had never, either individually or jointly with any other person, previously purchased or built a house or apartment. The property must have been purchased or built as your home. The relief does not include properties acquired for investment purposes.
You can claim a refund of any DIRT deducted from interest earned on savings used for the purchase of a property or a self-build in the 48 months prior to the purchase date (date of conveyance).
You can only claim relief on DIRT paid on savings up to a maximum of 20% of the purchase price or in the case of self-builds, 20% of the completion value of the property.
If you are a first-time buyer who either buys or self-builds a new residential property between 19 July 2016 and 31 December 2019, you may be entitled to claim a refund of income tax and DIRT paid over the previous 4 tax years. You can read more in our document about the Help to Buy incentive.
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's 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's 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
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.
Since 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, since 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. You can get more information on the Taxation of Credit Union Dividends and Interest (pdf) from Revenue.
How to apply
First-time buyer DIRT exemption
The property must be registered for Local Property Tax (LPT) to make a claim for a refund of DIRT. To make a claim you log in to the LPT On-line system and enter your PPS number or Tax Reference Number, Property ID and PIN.
Once in the LPT system, you click the Claim DIRT F.T.B. Refund button. This will display a claim form. The following information is needed to complete the form and submit the claim:
- Amount of DIRT to be refunded (maximum 20% of the purchase price or build cost)
- Purchase price or completion value for a self-build
- Purchase date
- Email address
- Bank account details to which the refund is to be paid (if Revenue have your details already these will be displayed but you can amend them if necessary)
- Evidence of DIRT deducted (for example, bank statements).
Note that your financial institution (bank, credit union or building society) must provide you with a statement of DIRT deducted from your account(s).
If you qualify for the relief you will get an email confirming this when your claim has been processed and the refund will issue to your bank account.
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