Jack is self-employed, aged 56, and earns €1,000 gross deposit interest in 2020 which is subject to DIRT. He has no other investment income. What PRSI liability, if any, does Jack have on this gross deposit interest for 2020?

• A. Nil.
• B. €70
• C. €40
• D. €20

Answer: (C)

The key idea is how PRSI applies to self‑employed individuals and investment income. In this context, PRSI is charged on gross income from self‑employment and on investment income that falls under PRSI for the self‑employed. The rate for this type of income is 4%. So on €1,000 of gross deposit interest, the PRSI liability is 4% of €1,000, which equals €40. DIRT is a separate tax withheld by the bank and does not change the PRSI calculation, it only affects the net amount you receive. Therefore the correct amount is €40.