Anne Rabbitte (Galway East, Fianna Fail)
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151. To ask the Minister for Finance if persons here who are also in receipt of a pension from another country, that is, a state pension, occupational pension or private pension, and may also be in receipt of other retirement benefits, are liable for tax; and if he will make a statement on the matter. [25740/17]

Michael Noonan (Limerick City, Fine Gael)
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Pension income is subject to income tax in the same way as other income. Irish pension income is taxable under Schedule E, as set out in section 19 of the Taxes Consolidation Act (TCA) 1997, and foreign pension income is taxable under Schedule D, as provided for in section 18 of the TCA.

An individual who is tax resident in Ireland is liable to Irish tax on his or her worldwide income and gains in the tax year.  Where appropriate, a credit against Irish tax may be due under the terms of a double taxation agreement in respect of foreign tax paid on foreign source income and gains that are assessable here. The level of credit available will depend on the source of the income, and the terms of the individual double taxation agreement.

Schedule E income, such as Irish pensions and employment income, is subject to tax under the PAYE system, with the appropriate credits applied and tax deducted at source.  Schedule D income, such as foreign pensions, is not taxed under PAYE and so must be declared separately to Revenue, and the appropriate tax paid over. Taxpayers who are tax resident in Ireland and who have foreign source income which has not been declared to Revenue should arrange, without delay, to provide Revenue with the necessary details so that their tax affairs can be regularised.

A taxpayer who has income taxed under the PAYE system (such as an Irish pension) and who also has non-PAYE income (such as a foreign pension), may, where the non-PAYE income does not exceed €5,000 for 2016 (or €3,174 for prior years), request Revenue to reduce their annual PAYE tax credits and rate band entitlements, so that the tax on their non-PAYE income is deducted by their pension provider or employer. Any such taxpayer is not considered a chargeable person and is not required to file an annual tax return. A taxpayer whose non-PAYE income exceeds this amount, or who does not request Revenue to reduce their tax credits to take account of that income, is a chargeable person and must file an annual tax return declaring the income.

I would point out that individuals aged 65 and over can avail of the age exemption limits. In order to qualify for this exemption a single individual’s income in the year of assessment must be less than €18,000 or in the case of a married couple or civil partners, €36,000. Marginal relief is provided where an individual’s total income exceeds the exemption limit applicable to that individual, but does not exceed a sum equal to twice that limit. In addition, income from State pensions, from Ireland and other sources, is not liable to the Universal Social Charge.