Dividends are payments made by a company to you as a reward for owning a share in the company.
You are liable to Income Tax on Dividends From Shares in Ireland and you must declare this income to Revenue.
Taxation of Share Dividends
If you are resident in Ireland and own shares and your shareholding gets paid a dividend, you will usually have to pay Revenue some of that in the form of Income Tax.
Additionally, PRSI and USC may also be due on the gross dividend
These will need to be declared and collected through the Self Assessment system (if applicable).
- If you receive dividend payments that have not been taxed under Pay As You Earn (PAYE) and the payments are less than €5,000 a year, you should use ROS myAccount to declare this income on your Income Tax return (Form 12).
- If the dividend payments total more than €5,000 a year, you will need to register for self-assessment and file a tax return (Form 11) .
How much tax do I pay on Share Dividends in Ireland?
Income tax on dividends is taxed the same way as any other income.
For example:- A PAYE employee on the highest rate of income tax, will pay 41 per cent income tax as well as USC and PRSI
Example – A shareholder received a net dividend of €1000 from an Irish company.
Gross dividend €1,000
Dividend withholding tax deducted at source (25%) = €250
Net dividend received €750
The shareholder must declare this income on their tax return.
The shareholder is a higher-rate taxpayer. Their “tax” rate on the dividend income will be 52%, which is made up of 40% Income Tax , 4% PRSI, and 8% USC.
The net dividend after all deductions (52% of €1000 = €520) will be €480
(This takes account of the 25% withholding tax deducted at source.)
Taxation of Dividends paid by Irish companies
If you own shares in Irish companies – they will always deduct 25% tax at source from the gross dividend, ( Dividend Withholding Tax (DWT) ) before you receive the payments.
You are entitled to a credit for the tax withheld by the company paying the dividend. If the balance of the withheld tax exceeds your tax liability, you will be entitled to a tax refund. (Tax calculation will include USC and PRSI)
Irish Taxation of Dividends on UK shares
You will be liable for Irish income tax on the net dividend received by you. No credit is allowed for any UK tax already deducted from the dividend payment. You must convert the net payment received to Euros and declare it on your Irish tax return form.
Irish Taxation of Dividends on US Shares
There is a 30% withholding tax on US dividends for non-US residents. However, if you complete a W8-Ben form for your stockbroker, a lower 15% tax rate will apply.
You will need to declare dividend income on your Irish tax return. You will be liable for either 5% or 25% of the dividend in additional tax. (Depending on whether you pay income tax at 20% or 40%)
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