Ireland has always welcomed qualified individuals looking to make this island on the cusp of the Atlantic their home.

Afterall, according to a report from the OECD, Ireland’s share of foreign-trained doctors is the third highest among western countries, at 42.3 percent. In fact, many of our best and most esteemed doctors hail from foreign shores and have been trained outside of the state.

If you are reading this, relocating to Ireland is a move you may be considering. Of course, with every career decision, comes questions and research.

One such question may be about your salary and how income tax will affect your living wage within the Republic of Ireland.

Firstly, let us tell you that the same OECD study that is cited above shows that Irish GPs earn 2.8 times the average industrial wage. Career assistance website, Indeed, also revealed that the average salary for a GP in Ireland is €98,122 per year.

However, those figures don’t enlighten you on the tax situation within the country. Allow us to try to shed some light…

Pay As You Earn

In Ireland, almost all income is subject to tax. 

The first income tax you need to know about is called PAYE (Pay As You Earn). This is a tax that is deducted from your salary by your employer on behalf of the state. 

It is a progressive tax, in so far as the amount of tax you pay depends on the amount of income you are earning. 

This tax is calculated at different rates, with the standard cut-off rate 20 percent for income up to a certain point, with a 40 percent tax rate calculated on any income above that amount. These rates will be determined depending on your marital status. 

As an example, let us keep it as simple as possible. 

If you are a single person working as a GP in Ireland and earning €100,000 per year, it would be calculated as 20 percent tax on the first €33,800 and 40 percent on €66,200.

In this instance, €33,800 would be the standard cut-off rate. Of course, there are other elements to this, with deductions made prior to making your overall PAYE calculation.

Cut-Off Rates

Every tax year, you will receive a notification detailing your tax credits and standard rate cut-off rate from the Revenue Commissioners. This details what rate of tax you will pay on your income and what credits you have that will allow you to reduce the tax you will pay on this income.

Your cut-off rate is affected by a few things and the amount of tax you pay can also be reduced by several different elements, including your tax credits. 

Your tax credits are determined by your personal circumstances. For instance, benefits in kind and non-PAYE income can decrease your tax credits.

There are also certain tax reliefs and tax allowances that can reduce the amount of tax you pay. 

What PAYE Will You Pay? 

Calculating the PAYE tax you will pay may seem complicated, but it isn’t brain surgery (even though, as doctors, some of you may find the idea of that less daunting!) 

First, before you calculate income tax, subtract the following: 

• Your pension contributions – The fixed amount being paid into your pensions scheme from your salary. 
• What you are paying to a permanent health benefit scheme. This can be up to a maximum of 10 percent of your income. 
• The tax allowances you have in place. 
• Expenses that were necessary to carry out your job as a GP. 

Then simply figure out your standard rate cut-off point and calculate your tax at 20 percent of your income up to that point and 40 percent above it. Then you’ll have your gross PAYE tax rate. After that, deduct your tax credits and you’ll know how much you will have to pay in PAYE.

Universal Social Charge 

The USC (Universal Social Charge) is another tax on your income. This is taken on the gross amount, before deductions, such as your pension contributions or PRSI. Unfortunately, tax credits and tax relief cannot not be used to reduce this amount in most cases.

USC is charged on a cumulative basis, similar to PAYE. As of 2021, the standard rate of USC is broken down as follows: the first €12,012 is calculated at 0.5 percent, the next €8,675 at two percent and the next €49,357 at four percent. The balance is calculated at eight percent. 

If you are starting a new job and the revenue commissioner does not have your most recent tax details, you may be put on a higher rate of tax, called emergency tax, until everything is in order. 

Before moving to a new country and starting a new career, it is always worth consulting a tax expert to assist you with the decision and to ensure all your details are in order. 

For more information on the Irish tax system, visit https://www.revenue.ie/. 

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