Deposit Interest Retention Tax Return to Shares

Credit Unions

When you save money with a credit union you do this by buying shares in the credit union. Each year you receive a dividend which will be a percentage of the value of your shares. The way the dividend is taxed depends on the type of credit union account that you have: a regular share account or a special share account. You can check with your credit union if you are not sure which type of account you have.

If you have a regular share account, DIRT is not deducted by the credit union. It is your responsibility to declare the dividend in your annual tax return.

If you have no tax liability on your income, you will not be taxed on your dividend. For this reason a regular share account is a good choice if you are not liable to pay income tax but you don’t meet the requirements above to obtain a refund of DIRT that has been deducted.

If you pay income tax at the 41% rate, then this rate will also apply to the dividend you receive on a regular share account and it may be preferable to open a special share account.

If you have a special share account, your credit union will deduct DIRT from your dividend. The dividend is taxed at 30%.

Special Term Accounts are deposit accounts that have a set term and have limits to the amounts that can be deposited in them. They can be medium term or long term. DIRT is charged at 30%. However, you can hold a dividend of €480 tax-free with a medium term account or €635 tax-free with a long term account, after which you will be charged DIRT at 30%

Deposit interest retention tax (D.I.R.T.), at the rate of 27% (from the 1st January 2011) 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 above D.I.R.T. rate was

• 25% for the period 8th April 2009 to the 31st December 2009
• 23% for the period 1st January 2009 to 7th April 2009 and
• 20% for the period 1st January 2002 to the 31st December 2008.

D.I.R.T. does not apply to

• Interest on deposits beneficially owned by non-residents,
• Deposits of Companies within the charge to Corporation Tax,
• Deposits of Revenue approved Pension Schemes, and
• Deposits of persons who are entitled to charitable exemption from tax.

A D.I.R.T. rate of 30% (from the 1st January, 2011) is payable on interest earned on a deposit where the interest cannot be calculated annually or more frequently and the interest cannot be determined until it is paid.

The above D.I.R.T. rate was

• 28% for the period 8th April 2009 to the 31st December 2010.
• 26% for the period 1st January 2009 to 7th April 2009 and
• 23% for the period 1st January 2002 to the 31st December 2008.

D.I.R.T. is a final liability for income tax purposes, i.e. the payment of retention tax at the standard rate by individuals liable to income tax at the higher rate is regarded as satisfying the individual’s full liability to this tax. However, in certain circumstances, an individual will also be liable to pay PRSI and/or the Health Contribution in respect of the Deposit Interest received.

The Universal Social Charge (USC) does not apply to Deposit Interest that has been subjected to Deposit Interest Retention Tax.

DIRT Refunds

If an individual is aged 65 or over or they are permanently incapacitated, they may be entitled to a refund of DIRT. For more information see DIRT Repayments. For forms applicable to DIRT Exempt Accounts, please see Forms

Tax & Duty Manuals - Section 16 FOI Act