Encashment Tax is a withholding tax deducted from income from public revenue dividends and dividends of a non-resident body. The individual who is responsible for the payment of income must deduct the tax.
The term 'public revenue dividends' includes dividends, interest and annuities payable out of both:
• the public revenue of any government
• the revenue of any foreign public authority or institution.
The standard rate of Income Tax (20%) applies to Encashment Tax.
Revenue can relieve a chargeable person of the obligation to deduct Encashment Tax on foreign dividends payable to Irish residents.
We grant relief by way of authorisation in a letter signed by an Assistant Secretary of the Revenue Commissioners. This letter absolves the chargeable person of the obligation to deduct Encashment Tax in respect of an account owned by a particular person.
A chargeable person should make an application for exemption by writing to:
Office of the Revenue Commissioners
Services and Transaction Taxes Unit (STTU)
For more information on this exemption, see Schedule 2 TCA 1997.