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
• revenue of any foreign public authority or institution.
From 01 January 2021 an applicable rate of 25% income tax must be deducted from encashment tax payments.
Prior to the 01 January 2021 encashment tax was deducted at the rate of 20%.
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.