Deposit Interest Retention Tax (DIRT)

Deposit Interest Retention Tax, widely known simply as DIRT, is a tax applied in Ireland to interest earned on savings held with Irish banks, building societies and credit unions. Unlike taxes a saver must independently calculate and pay themselves at the end of the year, DIRT is deducted automatically by the financial institution itself at the precise point interest is credited, and is then paid directly to the Revenue Commissioners on the saver's behalf without any further action required.

Because the tax is withheld at source in this way, most savers never actually see the full gross interest their account technically earns — the interest figure shown on a statement is typically already net of DIRT, with the deducted amount having already been sent straight to Revenue without the saver ever needing to file anything themselves in the ordinary case.

If your savings account earns interest, the bank takes a defined slice of that interest for the tax authority before the money ever actually reaches you, in much the same way an employer withholds income tax from a paycheck before it is ever paid out. You do not have to remember to separately pay DIRT yourself — the deduction has effectively already been made automatically by the time you see your updated account balance.

Some savers, such as certain people over a defined age with genuinely limited income, or holders of certain qualifying long-term savings products, may be entitled to an exemption from, or a refund of, DIRT, which generally must be actively and formally claimed rather than being applied automatically on the saver's behalf.

The financial institution applies the applicable DIRT rate directly to interest as it is credited to a given account, withholds that calculated amount, and remits it to Revenue on a periodic basis, reporting aggregated figures collectively rather than requiring the individual saver to file a separate tax return purely for this specific interest income in most ordinary cases.

Certain categories of saver, including some people aged 65 or over whose total income falls below the relevant exemption threshold, and some individuals dealing with a long-term illness, may be entitled to have DIRT refunded or to register for genuinely DIRT-free interest going forward, generally by completing the appropriate Revenue declaration form directly with their own bank.

DIRT applies specifically and only to ordinary deposit interest; other forms of investment income earned in Ireland, such as dividends or gains realized on certain investment funds, are instead taxed under entirely separate regimes carrying their own distinct rates and rules, so DIRT should never simply be assumed to cover every possible form of investment return a saver might earn.

DIRT has historically generated a meaningful, if relatively modest, share of Ireland's overall tax revenue, and its effective rate has been adjusted by successive governments over the years in response to broader fiscal policy goals, making it worth checking the current rate directly with Revenue rather than assuming it has remained unchanged from an earlier period.

Non-resident account holders in Ireland may be entitled to have DIRT deducted at a reduced rate or waived entirely under the terms of a relevant double-taxation agreement between Ireland and their own country of residence, though claiming this treatment generally requires the saver to provide the bank with appropriate documentation confirming their non-resident status before interest is credited.

Savers who move abroad after opening an Irish account should update their declared residency status promptly, since failing to do so can result in DIRT being withheld unnecessarily on interest the saver may have been entitled to receive gross.

• Office of the Revenue Commissioners (Ireland)