Revenue Note for Guidance

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Revenue Note for Guidance


Interest payments by certain deposit takers


This Chapter provides for a retention tax on interest accruing on deposit accounts (commonly known as “Deposit Interest Retention Tax” or more usually “DIRT”) at the rate of

on deposits held with a “relevant deposit taker”.

The tax must be deducted at source out of interest paid or credited on certain deposits (“relevant deposits”) of Irish residents with “relevant deposit takers” (namely, the licensed banks, credit unions, the Post Office Savings Bank and the Building Societies). In these notes the term “financial institutions” is, in general, used to denote references to “relevant deposit takers”.

DIRT does not apply to interest on —

DIRT deducted from interest is a final liability tax, that is, once DIRT is paid no further liability arises on that interest. There is no provision for refunds of DIRT except to charities, to individuals who are aged 65 or over and to individuals who are permanently incapacitated by reason of mental or physical infirmity from maintaining themselves.

Chapter 5 of this Part applies the DIRT provisions to dividends paid by credit unions.

256 Interpretation (Chapter 4)


Section 256 is concerned with the interpretation of certain words and expressions used in Chapter 4 of Part 8.



(1) “amount on account of appropriate tax” is an aid to the construction and application of the special “payment on account” provisions contained in section 258(4) under which a financial institution must make interim payments of DIRT accruing for a year of assessment.

appropriate tax” is the amount of tax (that is, DIRT) which must be deducted by a financial institution from a payment of “relevant interest”. In these notes “DIRT” is used to refer to the tax deducted under this Chapter rather than “appropriate tax”. The rates of DIRT in operation since 6 April 2001 are as follows:

Date / Deposit

Special Savings Account / Special Term Accounts

Other relevant deposits where interest is paid annually or at more frequent intervals

Other deposits

6 April 2001 – 31 December 2008


Standard rate of income tax (20%)

Standard rate of income tax plus 3 per cent (23%)

1 January 2009 – 7 April 2009


Standard rate of income tax plus 3 per cent (23%)

Standard rate of income tax plus 6 per cent (26%)

8 April 2009 – 31 December 2010




1 January 2011 – 31 December 2011




1 January 2012 – 31 December 2012




1 January 2013 – 31 December 2013




1 January 2014




1 January 2017 – 31 December 2017




1 January 2018 – 31 December 2018




1 January 2019 – 31 December 2019




1 January 2020 – 31 December 2020




building society”, in addition to building societies established under Irish law, includes a building society established in accordance with the law of another Member State of the European Communities.

credit union” means a society registered under the Credit Union Act 1997, including a society deemed to be so registered under section 5(3) of that Act, that is, a society which, immediately before the commencement of that section, was registered as a credit union under the Industrial and Provident Societies Acts 1893 to 1978.

deposit” is the type of account the interest on which is subject to DIRT. The reference to “with or without interest” is intended to deal with situations where, for example, a non-interest-bearing deposit is converted to an interest-bearing deposit after the money in the deposit has been paid to the financial institution. The definition is intended to embrace normal deposit accounts, certificates of deposit and time deposits. It also covers the situation where the full amount of capital on deposit is not guaranteed repayable, or where the amount to be repaid is linked to or determined by changes in a stock exchange index.

EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement.

EEA state” means a state which is a contracting party to the EEA Agreement.

foreign currency” means a currency other than the currency of the State.

interest” is given an extended meaning and includes any amount which is or is to be repaid in excess of the amount of the deposit.

long term account” means an account in which the deposit is to be held in the account for a period of not less than 5 years.

medium term account” means an account in which the deposit is to be held in the account for a period of not less than 3 years.

pension scheme” is —

  • an exempt approved scheme within the meaning of section 784 (this is basically an occupational pension scheme which is approved by the Revenue Commissioners for tax purposes and which is established under irrevocable trusts), and
  • retirement annuity contracts or trust schemes to which section 784 or 785 apply (these are pension contracts of a type often availed of by individuals, particularly the self-employed).

“Personal Retirements Savings Account” has the same meaning as in section 787A.

PRSA provider” has the same meaning as in Part X of the Pensions Act 1990.

relevant deposit” identifies the deposit accounts to which DIRT applies. The following are excluded from the definition of “relevant deposit” —

  • Deposits made with a financial institution by —
    • another financial institution,
    • the Central Bank of Ireland (the Central Bank itself is not a “relevant deposit taker”),
    • the Investor Compensation Company Limited,
    • the National Treasury Management Agency (NTMA),
    • the State acting through the NTMA (this exclusion is necessary as the State is normally the beneficial owner of interest on deposits made by the NTMA),
    • a Fund investment vehicle (within the meaning of section 37 of the National Treasury Management Agency (Amendment) Act 2014) of which the Minister for Finance is the sole beneficial owner,
    • the National Asset Management Agency (NAMA),
    • the State acting through NAMA
    • the Strategic Banking Corporation of Ireland (SBCI) or a subsidiary wholly owned by it or a subsidiary wholly owned by any such subsidiary,
    • the Minister for Social Protection in respect of accounts held under section 9 of the Social Welfare Consolidation Act 2005,
    • a Real Estate Investment Trust (REIT) or a member of a group REIT [by virtue of Section 705G(3) TCA 1997]
    • the National Pensions Reserve Fund Commission (NPRFC) or a Commission investment vehicle, [Section 5(1) and Schedule 1 of the National Treasury Management Agency (Amendment) Act 2014 provides for the dissolution, by Ministerial Order, of the NPRFC. The Ministerial Order has not been signed as of yet.]
    • the State acting through the NPRFC or an NPRFC investment vehicle,
    • Icarom plc.

    In effect, interest on inter-bank deposits is not subject to DIRT.

    [It is a condition of these exclusions that a financial institution, the Central Bank, the NTMA, the NAMA, the SBCI the NPRFC, the State or Icarom plc, should beneficially own the interest on such deposits. This is necessary to ensure that interest on certain transactions between banks and non-banks does not escape DIRT. For example, an inter-bank certificate of deposit could be sold on by the bank making the deposit to a non-banking company which would then receive the interest. The interest, however, not being beneficially owned by a financial institution at the time it is paid, would be subject to DIRT.]

  • Interest-bearing securities (for example, loan stock) issued by a financial institution which are listed on a stock exchange. Without this exclusion the definition of “deposit” would otherwise be wide enough to cover loan stock on which interest is payable.
  • Deposits in foreign branches of a financial institution which is resident in the State for corporation tax purposes.
  • Deposits in foreign branches of a foreign financial institution which has a branch in Ireland. [Relevant deposits in the Irish branch of such a financial institution are subject to DIRT].
  • Certain limited foreign currency (that is, a currency other than the currency of the State) deposits. Interest on foreign currency deposits made by individuals on or after 1 June, 1991 is subject to DIRT. Foreign currency deposits by individuals made before that date (which under exchange controls could only be made by non-residents) continue to be outside the scope of DIRT. Additions in the same currency in the period 1 June, 1991 to 1 January, 1993 to foreign accounts of individuals opened before 1 June, 1991 are excluded from DIRT. As and from 1 January, 1993, all foreign currency deposits (that is, all new deposits and all new additions to existing deposits) made after that date are subject to DIRT.
  • Deposits made on or after 25 March, 2002 which are beneficially owned by a company or a pension scheme and where the Revenue reference numbers appropriate to these bodies have been provided to the financial institutions. (Prior to that date a declaration was required.)
  • Deposits which are made by a Personal Retirement Savings Account (PRSA) provider where
    • the deposits are held for the purposes of a Personal Retirement Savings Account
    • and

    • the reference number assigned by Revenue to the PRSA provider has been provided to the financial institution.
  • Irish currency deposits of foreign residents. The conditions for exclusion, so that interest may be paid gross, are that —
    • no part of the interest due must be beneficially owned by a person resident in the State (thus, the interest on a joint account beneficially owned by an Irish and a foreign resident would be subject to DIRT), and
    • the bank, etc must have received a declaration as to non-residence under section 263.
  • Deposits of charities made on or after 25 March 2002 which are entitled, in respect of the interest, to exemption from income tax by virtue of section 207(1)(b) or from corporation tax (if the charity is a company) under section 207(1)(b) as applied by section 76(6). The charity must provide its charity reference number to the financial institution. (Prior to that date a declaration was required.)
  • Deposits referred to in subsections (1A) and (1B) (see below).

“relevant deposit taker” specifies the financial institutions within the DIRT scheme. It includes all licensed banks and certain other deposit takers excluded from the requirement to hold a licence from the Central Bank, such as building societies, credit unions and the Post Office Savings Banks. It also includes branches in the State of banks and building societies which are established in and subject to a regulatory authority in another member State of the EEA. Also included is a “specified intermediary” in relation only to a “specified deposit” (see below). Industrial and provident societies or other persons who might take money on deposit are outside the scope of the definition.

The inclusion of the Post Offices Savings Bank does not bring within the DIRT scheme savings certificates, the National Instalment – Savings Scheme or savings bonds the interest on which is to be paid without deduction of tax. Those schemes are separate from deposits with the Post Office Savings Bank.

relevant interest” means interest paid in respect of a “relevant deposit”, (but see section 261A with regard to special term accounts).

“return” is the returns required to be made by a financial institution to the Collector-General under section 258(2).

special savings account” is an account opened on or after 1 January, 1993 and before 6 April, 2001 by an individual which complies with the conditions in section 264(1) and in respect of which a declaration of the kind referred to in section 264(2) is made to the financial institution.

special term account” means a medium term account (3 years or more) or a long term account (5 years or more) opened, on or after the 1 January 2002 and before the 16th October 2013, with a relevant deposit taker in respect of which the conditions of section 264A(1) were satisfied, and a declaration of the kind mentioned in section 264A(2) had been made to the relevant deposit taker.

special term share account” has the same meaning as in section 267A.

“specified deposit” is a deposit of a class designated by the Minister for Finance for the purposes of this definition.

specified intermediary” is a person appointed by the National Treasury Management Agency for the purposes only of taking specified deposits.

Deposits under subsection (1A) and (1B) – Exempt from DIRT

These deposits were excluded from being a “relevant deposit” by the Finance Act 2007.

(1A) A deposit shall be a deposit under subsection (1A) for any year of assessment if —

  • (a) at any time in that year of assessment the individual beneficially entitled to the interest, the individual’s spouse or the individual’s civil partner is 65 years or over, and the total income of the individual for that year of assessment does not exceed the specified amount (within the meaning of section 188(2)) (i.e. the relevant exemption limit),
  • (b) a declaration of the kind mentioned in section 263A (see below) has been made to the relevant deposit taker.

(1B) A deposit shall also be a deposit under subsection (1B) for any year of assessment if —

  • (a) the individual beneficially entitled to any interest paid in respect of that deposit in that year of assessment, the individual’s spouse or the individual’s civil partner is a relevant person (within the meaning of section 267(1)(b) (i.e. permanently incapacitated)) and the individual would, in accordance with section 267(3), be entitled to repayment of the whole of any appropriate tax if it has been deducted from that interest. It also provides for a person who is entitled to the interest as a trustee of a special trust for permanently incapacitated individuals under section 189A(2) and who would, under section 267(2), be entitled to repayment of the whole of the DIRT if it had been deducted,
  • (b) a declaration of the kind mentioned in section 263B has been made to the Revenue Commissioners,
  • (c) a notification of the kind mentioned in section 263C has been issued by the Revenue Commissioners to the relevant deposit taker that the deposit is a deposit to which this subsection refers and that the notification is not cancelled in accordance with section 263C(2), and
  • (d) the individual beneficially entitled to the interest is not otherwise an individual referred to in subsection (1A) (i.e. self , spouse or civil partner is over 65 and the total income is below the exemption limit).

If the notification under section 263C(2) is cancelled then the Revenue Commissioners will notify the deposit taker who shall not treat it as a deposit under this subsection from that time.


(2)(a) The meaning of “payment” and “paid” is expanded to encompass situations in which interest on a relevant deposit is not paid over to the depositor but is credited to the deposit account (or to any other account). Crediting interest in this manner therefore constitutes payment; consequently, DIRT must be deducted by the financial institution from the amount credited and payment must be made to the Collector-General under section 258(3) and (4) or section 259(4).

(2)(b) The amount of a payment from which tax is to be deducted is the grossed-up amount of the payment before deduction of DIRT. This provision is necessary for the interpretation of, in particular, section 257(1).

(2)(c) A deposit is regarded as held at a foreign or, as the case may be, Irish branch of a financial institution if it is recorded in the books of the bank, etc as a liability of that branch. This is particularly relevant for the purposes of paragraphs (c) and (d) of the definition of “relevant deposit”.

(3) A relevant deposit taker must obtain the tax reference number of a person making a specified deposit. The person making the deposit is required to provide the number.

Relevant Date: Finance Act 2017