Michael, an Irish resident, is entitled to a gross dividend of €1,000 from an Irish resident company. What amount of tax must the company currently deduct from this dividend before payment?

• A. Nil.
• B. €150
• C. €250
• D. €300

Answer: (C)

In Ireland, dividends paid to Irish resident individuals from Irish companies are subject to Dividend Withholding Tax (DWT) at source. The standard rate for individuals is 25%. So from a gross dividend of €1,000, the company must withhold 25%: €1,000 × 0.25 = €250. That €250 is remitted to Revenue as tax, and the recipient can claim it as a credit against their overall Irish income tax liability on the dividend. If their total tax due on that income is greater than the credit, they pay the difference; if it's less, they may receive a refund.