# USC & Double Taxation Agreement



## DB74 (7 Apr 2014)

I am a defeated man!

I cannot work out how the USC Double Taxation Relief is calculated. I can do the PAYE one no problem but am completely stumped when it comes to the USC one. The foreign tax paid has some bearing on it because if I reduce the foreign tax to say €3,000 then there is no USC credit at all.

Irish employment income - €25,000, PAYE of €1,700, USC €1,069
Foreign earnings - €20,000, Tax of €4,000

Per ROS offline comp, there is Double Taxation Relief on USC of €236.99

Double Taxation Relief (PAYE) = €3,598.24 (don't think this is relevant but still)
Irish effective rate = 18.36%
USC charge per return = €2,468.80

Anyone able to shed some light on this please?

* - obviously the figures are made up but I do have a return with real figures where I can't solve the problem


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## Joe_90 (7 Apr 2014)

You are not alone.  I had a look at Schedule 24 and I am bamboozelled.

http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/schedules.pdf

around page 120

I think, but am open to correction, based on the steps outlined:
1. Total Foreign tax €4,000
2. Credit Allowed €3,598.24
3. €20,000-€19,598.24=€401.76
4. €401.76 x 41%=€164.72
5. €3,598.24+€164.72=€3,762.96-4,000=€237.04

That's my take on it, I'm sure our learned friend @Mandelbrot will correct me if I'm wrong.

As an aside does anyone know what the "B" in Benoit B. Mandelbrot stands for?


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## DB74 (8 Apr 2014)

Sir, you are a genius!


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## mandelbrot (8 Apr 2014)

Ugh, good man Joe, I did not have the stomach for that...

Interestingly on the USC - I have a relative who works in a well paid PAYE job in another EU country, but he is Irish resident (works 3 weeks on 4 weeks off or something like that). So his foreign salary is assessable here under Case III, but he is entitled to the PAYE credit.

The sting in the tail is that even though it's PAYE income which attracts the PAYE tax credit, he still gets hit with the 3% additional USC on the income in excess of 100k... surely this is unfair? If it was an Irish PAYE employment it'd be all 7%... I'm thinking it must contravene some of the principles of the EU (freedom of movement / establishment etc...)??


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## prochida (15 Apr 2014)

*USC not credited*

Hi

Here is a situation. Broad figures here as I don't have the details with me while I am traveling.

Resident in Ireland married with a small self assessed income of 12k
Foreign income from working rotational schedule in Holland of over 200k 
Dutch PAYE tax was paid on this to the extent of about 110k. 
Contributed 30k to an Irish pension.

Now when using ROS the credit under DTA for PAYE came in at 70k which balanced out as no PAYE liability 
The 30+ k balance of the DTA was not credited to USC liability and the final tax determination showed that I had a liability for 36k  for PRSI and USC.

Reading the Revenue notes and guidelines it appears that USC is considered an income tax and should be treated the same way as PAYE but in ROS the excess from the DTA after PAYE does not appear as a credit against USC.

Has anybody had a similar  experience or clarification from revenue on how DTA and USC are treated in this case.


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## Joe_90 (15 Apr 2014)

What is the nature of the Irish income.

What heading are you including the Dutch income and tax under on the Form 11?

I put figures into ROS and it kicks out a DTC USC Cr.


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## prochida (16 Apr 2014)

Irish income from rental property and interest
Can't remember where the Dutch income and tax was entered  in form 11.
Traveling until end of the month and will come back to you when I have my files.


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