If you are newly – arrived in Ireland and just got your first job, the information below will be useful to help you to better understand how the tax payment to Revenue works. Revenue is the Irish agency responsible for collecting all taxes owed by employed citizens in the country, including English exchange students.
You will see that, even though you can only work part-time, students must pay taxes. However, this is only a small fee and when you decide to return to your home country, you will be able to get your tax back. This is because your stay in the country is temporary, which means that Ireland is not the country where you will retire.
Let’s look at how the Irish tax system works. To work legally in the country you will basically need two things, a PPS number or to give it it’s full title: the Personal Public Service number, and to register on the Revenue website. If you’ve already got your job, you probably already have your PPS number.
Now let’s get down to what matters in this article which is how to create your registration on the Revenue website and how to add a new job to your profile.
Create an Account on Revenue
The first step after receiving your PPS is to create an account on the Revenue website: https://www.revenue.ie/
ADD a Job or Pension
After you create your account, you should ask your employer for its company registration number. For example, this number works like the CNPJ in Brazil,. When accessing your account, you will have the ADD Job or Pension option. By filling in all the information you are ensuring you are tax compliant.
Very simple, right? Yes. However, many times you will come across other information such as P12, P21, P45, P60, PAYE, PRSI, Revenue, Tax, Tax refund, emergency rate. These terms might scare you a little, but that is why we made this post. Let’s understand what they are there for:
What is PAYE Tax?
In Ireland tax is paid on any service or work performed. The term Pay as You Earn is very self explanatory. This means that every time you get paid for a job or service performed, you will have to pay taxes.
What is PRSI Tax?
PRSI is Pay Related Social Insurance. This tax is collected and directed toward health benefits. All employees must pay this tax, from the age of 16 to 66 years old. There are some exceptions but these are very rare.
What is USC Tax?
As an English student, you should not pay for this tax, since the Universal Social Charge is for employees with incomes over €12,012. As a student, you will have a maximum monthly income of €800, which leads to an annual sum of €9,600. USC is taxable on gross revenue and also on additional benefits. In short, by receiving less, students pay less taxes.
What is the Emergency rate?
This is the dreaded rate that we want to help you to avoid. See, when registering your employer, you should also request a form called the P12. In this form, you certify that you will not receive more than € 12,012. Thus, when you are taxed, you will not run the risk of incurring a 41% reduction in your pay.
That is all? No. The Emergency charge can occur during the transition from one job to another, or if are working in two jobs. It might seem uncommon for you, the idea of working for two companies, but actually is very likely to happen if you work in the hospitality sector. You might work 10 hours for a Recruiting Agency and 10 hours at a pub or restaurant.
There is nothing illegal here. The point is that when the Revenue, for any reason, is unable to understand what your annual income is, they apply the Emergency rate as a way to get you to explain what is happening. After seeing such a reduction in your pay, you will definitely contact the Revenue and make them aware of your situation. Right?
For this purpose, there is another form you should present. This is called a P45. The P45 is a letter issued by your former employer stating that you have resigned your previous role at that company. What happens is that often this letter takes from 15 to 30 days to be prepared and so you can be taxed at the emergency rate until you submit the P45 to the Revenue.
To present the P45, you can either submit it to the Revenue website, under the tab My Inquiries or drop in at the tax office closest to your residence.The process is simple and fast. On receiving your next payslip, you will receive a tax refund and from that payslip onwards, you will have a normal tax rate.
Although, no one is happy to their pay reduced so drastically, it is important to note that any and all money paid in tax is stored and you will receive the chargeback after regularizing your situation.
What is the P60?
P60 is the annual statement of pay, tax and social insurance contributions from your employer. In the P60, all taxes paid in the previous year will be noted. With this you can ask the Revenue for a revaluation of your taxes. With this re-evaluation, you may receive a chargeback to your bank account or by cheque. It is worth making this request, since it costs nothing and you may receive a refund. Extra money is always worth it.
What is P21?
The P21 is a statement issued at the end of the year, in which you can inform the Revenue of your expenses. This statement is very similar to the Income Tax Declaration in some other countries. You can log it quickly through the Revenue website by filling in the information on your annual income or additional incomes, and your expenses in the areas of health, housing, education, etc. By submitting it, the Revenue will evaluate your application and deposit any chargeback you are entitled to.
What is P50?
The P50 is the form used when you are unemployed or when you decide it is time to go back to your beautiful country of origin. By completing all the information requested on the form, the Revenue will pay you back all the fees paid during your stay in Ireland. Amazing?
Although these last two items are unrelated to the Revenue, we think it is important to talk about them to help you to know the terms relating to your wages.
What is Payroll and Pay slip?
Payroll is the demonstration of your hours worked. The contracting company must do the Payroll at the end of each work cycle and assess the hours worked and any leave take, for example, national holidays, personal holidays, sick days etc.
Pay slip is the payment statement. In it, the company states the amounts owed, the taxes charged and the amount that was paid at the end of all these calculations.
See the examples below:
There are many other acronyms and information about the Irish tax system but here we have covered all those that apply to you as an English student, to ensure you can navigate these processes easily. If you still have any questions or would like to share your experience during any of the processes above, comment below. We also accept suggestions for posts!
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