Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The legislation governing the operation of appropriate tax on interest earned on deposits held in the State, referred to as Deposit Interest Retention Tax (DIRT), is set out in Chapters 4 and 5 of Part 8 of the Taxes Consolidation Act 1997.

The current rate of DIRT is 41%. DIRT has been charged at 41% from the 1st January 2014 and is deducted at source by deposit takers (e.g. banks, building societies, credit unions, Post Office Savings Bank, etc.) from interest paid or credited on deposits of Irish residents.

The net yield from DIRT collected in the past three financial years amounts to €1,516.8 million. This comprises €436.7 million in 2014, €499.5 million in 2013 and €580.6 million in 2012.

While all tax policies are continually open to review, it is not customary for the Minister for Finance to comment in advance on issues that are appropriate for consideration in the context of the Budget. 

Interest is exempted from DIRT mainly in the following circumstances:

Individuals aged 65 or older

An account held by an individual where the individual or his or her spouse or civil partner is aged 65 or older, and his or her total income in a year (including interest earned) is below the annual exemption limit, is exempt from DIRT.

The annual exemption limits for 2015 are €18,000 in the case of a single person and €36,000 in the case of a married couple or civil partnership.

Permanently Incapacitated Individuals

An account held by an individual or his or her spouse or civil partner is exempt from DIRT where they are:

1. permanently incapacitated by reason of physical or mental infirmity from maintaining himself or herself and

2. not liable to pay income tax because of the level of his or her income. 

Medium and Long Term Deposits

Prior to the enactment of the Finance (No.2) Act of 2013 a portion of interest earnings on all medium and long term deposits was exempted from DIRT in accordance with s.261A of the Act. For this purpose medium term deposits are defined as deposits which are held by a deposit taker for a minimum of three years and long term deposits are those held for a minimum of five years. These provisions continue to apply to medium and long term deposit accounts opened prior to 16 October 2013 for a duration of three and five years respectively from that date.

Companies, Pension Funds and Charities

DIRT is not deducted from interest paid on deposits held by companies, approved pension funds or exempt charities.

Non-Resident Account Holders

Deposit accounts where all of the interest on the deposit is beneficially owned by a person or persons resident outside the State are exempt from the application of DIRT.

Refund of DIRT to first-time buyers

The Finance Act 2014 inserted a new section, Section 266A, into the Taxes Consolidation Act (TCA) 1997.  Section 266A provides for a repayment of DIRT on certain savings held by a qualifying first time purchaser prior to the purchase of a home, where that purchase is made between 14 October 2014 and 31 December 2017.