Enhanced Reporting Requirements (ERR) – What You Need To Do

,

Enhanced Reporting Requirements (ERR)

Signed into law in December 2022, the Finance Act 2022 has changed the requirements governing the reporting of expenses to Revenue. Under a new system referred to as Enhanced Reporting Requirements (ERR), companies are now required to report any “reportable benefits” paid to employees and/or directors. These are benefits which are not currently subject to tax under the PAYE system and are the following:

  • The remote working daily allowance of €3.20
  • The payment of travel and subsistence expenses
  • The small benefit exemption

Anyone wishing to examine these changes themselves should consult Section 897C of the Finance Act. However, here we will provide an overview of these changes, the system for reporting these expenses, and advice on how to prepare. The new ERR regime is effective from 1 January 2024.

There are 3 options from which employers can choose to make ERR submissions:

  1. Completion of an online form on ROS Online
  2. Manually upload a file to ROS Online
  3. Directly from their payroll or expense management system

What information does ERR require?

Compliance with the “reportable benefits” system involves sending on employee-related information such as the employee’s name, address, DOB, PPSN, staff number, and employment ID. Additionally, the payment date, value, and category are all be included. However, the three categories of expense all have slightly different requirements, which can be broken down as follows:

Travel & Subsistence: this covers payments an employer makes to an employee/director regarding travel or subsistence incurred by the employee, where no tax is deducted. When submitting a report to Revenue, the amount and date paid should be provided for each of the following categories:

  • Travel Vouched
  • Travel Unvouched
  • Subsistence Vouched
  • Subsistence Unvouched
  • Eating on site
  • Site based employees (includes “Country Money”)
  • Emergency Travel

Small Benefit: this covers any tax-free benefits that an employee/director may be provided by their employer. These can include vouchers but extends to many kinds of benefits. When making these payments, the employer should ensure the payment conforms to the standards set out in Section 112B of the Taxes Consolidation Act 1997.

Notable conditions here are that the voucher or benefit cannot exceed €1000 in value and only two vouchers or benefits may be given in any one tax year (it should be noted that these conditions have also only been in effect as a result of the Finance Act 2022; previous limits were €500 in value and only one voucher per year).

Employers are required to report the following:

  • Date provided
  • Value

Remote working daily allowance: this covers any payment an employee/director may receive from their employer which relates to days the employee worked from home. These payments can come to no more than €3.20 per day. Employers are now expected to report:

  • Number of days
  • Amount paid
  • Date paid

How can we help?

  • Provide bespoke training to key stakeholders.
  • Review and analyse how your organisation currently collects information related to the reportable benefits.
  • Review your organisation’s policies to evaluate the different types of employee expenses your organisation currently makes and update the language used, where necessary, to bring your own records of these expenses in line with the ERR categories.
  • ERR Reporting on an outsourced basis (including reviewing databases, enriching file with the required data for ERR, preparing the final file to be converted to Revenue approved format and making ERR submissions to Revenue).

For further information, please contact Carol Hartnett, Manager in our Accounting & Financial Advisory Department.

/by

New Procurement Threshold to Significantly Increase Public Sector Accessibility to Goods and Services

,

Changes to Procurement Rules, Changes to Procurement Thresholds

In March 2023, the Department of Public Expenditure and Reform issued updates to existing procurement guidelines This update, contained in Circular 05/2023, have made some significant changes to the thresholds for procurement and are intended to facilitate easier procurement for SMEs. To this end, there has been a loosening of procurement rules covering procurements of a value between €25,000 and €50,000. Below, we go through the most important changes to procurement regulations.

It should be noted that, at the time of publishing, the procurement guidelines PDF available on the Office of Government Procurement website has not been updated to take account of Circular 05/2023. However, Circular 05/2023 states that the new guidelines have come into effect immediately.

Changes to Procurement thresholds:

The updates have made changes to rules for procurement for goods and services and procurement for works. Under the previous guidelines relating to procurement for goods and services, there were three separate thresholds for procurement, each with a different set of requirements for a contracting authority. These thresholds were:

  1. less than €5,000;
  2. €5,000 – €25,000;
  3. €25,000 – EU threshold.

After the Circular 05/2023 revisions, these thresholds for procurement for goods and services are now as follows:

  1. less than €5,000;
  2. €5,000 – €50,000;
  3. €25,000 – EU threshold.

Guidelines for the €5,000 – €50,000 Procurement Threshold

The significant change here is clearly to the €5,000 – €50,000 threshold. What this means is that now procurement for goods and services for any amount within this range can be conducted according to the following guidelines:

  1. Seek at least three written tenders from interested and competent suppliers/service providers
  2. Evaluate offers against relevant requirements using a scoring sheet;
  3. Select the most suitable offer and advise all tenderers regarding the decision.

Previously, procurements above €25,000 were required to be conducted through a more extensive and formalized process. This included using an Open Procedure and advertising the contract on the eTenders website. These requirements now apply to procurements above €50,000. In other words, one way of understanding these changes is to see that the methods previously required for conducting procurement of a value between €5,000 and €25,000, now apply to conducting procurement of a value between €5,000 and €50,000.

However, it should be noted that there are several exceptions to this rule. Crucially, while procurement contracts between €25,000 and €50,000 do not have to be advertised on eTenders, contract award information does have to be published for these contracts. Upon award of the contract, you are still required to publish the contract information on eTenders, even if you are no longer required to advertise the contract on eTenders. Additionally, while there is no requirement to advertise on eTenders, the Circular still encourages contracting authorities to do so if they wish.

A further exception to the updates worth noting is that it remains the case that where Government Departments and Offices have agreed contracts above €25,000 without a competitive process, this should be reported to the Comptroller and Auditor General.

Works Thresholds and Other Issues in Circular 05/2023:

Similar to the goods and services changes, the thresholds related to works contracts have also been adjusted. Now, for works contracts of a value less than €200,000, it is sufficient to seek at least five written tenders from interested and competent contractors. As with procurement for goods and services, this represents a raising of the threshold.

However, the Circular is explicit in adding that “the threshold at which contracting authorities are required to advertise all contracts for works-related services remains at €50,000”. A typical example of this sort of service might be consultancy; for this sort of procurement, the threshold remains unchanged.

Finally, Circular 05/2023 does contain an extensive range of advice regarding how to go about conducting procurement. While this advice is not binding, it may be useful to for conducting procurement and includes recommendations such as:

  1. Undertake preliminary market consultations prior to tendering
  2. Subdivide contract into lots
  3. Sue Prior Information Notices to facilitate SMEs forming a consortium prior to tendering
  4. Use the “open procedure” for tendering where possible
  5. Ensure selection criteria set for tenderers are relevant and proportionate to the contract
  6. Ensure any turnover/financial capacity requirement is proportionate to the risk involved
  7. Indicate in tender documents where reasonable variants to the specifications are acceptable.
  8. Use a Dynamic Purchasing Systems (DPS) for the procurement of commonly used goods, works or services which are generally available on the market.

Contributors
                                                    

Vincent Teo | Partner & Head of Public Sector & Government Services

Vincent Teo
Partner & Head of Public Sector & Government Services

 Dr. Conor Dowling | Research & Policy Executive | Risk Consulting

Dr. Conor Dowling
Research & Policy Executive
Risk Consulting
/by

Public Sector Climate Action Mandate 2023 – What you need to know

, ,

Public Sector Climate Action Mandate

In May of this year, the Government approved the updated 2023 Public Sector Climate Action Mandate (PSCAM). The Mandate, first introduced as part of the Climate Action Plan (CAP) 2021, sets out the goals Public Sector Bodies must achieve as part of the government’s overall strategy for reducing emissions. The newly updated Mandate is an expansion of the 2022 Mandate. New actions have been added and existing actions have been expanded. This article will talk through the updated Mandate, explain its purpose and describe the new requirements it presents.

What is the Mandate?

The CAP’s overall aim is to achieve a 51% reduction in greenhouse gas emissions in Ireland by 2030. While the CAP acknowledges that the public sector is not the major driver of emissions, the Mandate has been introduced to facilitate the public sector in taking a leading role in reducing emissions. The Mandate must be followed for those bodies it applies to, but it should be noted that it does not apply to every public sector body. Local Authorities, Commercial Semi-State Agencies and Schools are all exempt from the Mandate. Size is also a consideration when adhering to the Mandate. The Mandate places greater responsibilities on government departments and also on organisations that consume over 50 GWh of energy per annum than it does on smaller bodies, which can fulfil the Mandate’s minimum requirements.

Status of the 2022 Mandate

For those public bodies the Mandate does apply to, many of the requirements found in the updated Mandate are unchanged from previous years. For instance, the requirement to establish and support Green Teams has not been altered. Furthermore, nothing has been removed from the Mandate. This means that any work completed to fulfil the previous Mandate remains valid. Any organisation still working on fulfilling the previous Mandate can continue to use the guides made available by the Sustainable Energy Authority of Ireland. We anticipate that updated guidelines will be made available for the new Mandate, however, no timeline for this is available so far.

Changes from the 2022 Mandate

For those who are subject to the Mandate, the following are the major changes to be aware of:

  • A new requirement has been added stating that senior management complete a climate action leadership training course in 2023.
  • The requirement that sustainability and emissions be addressed in the annual report has been amended. The annual report must now also address: a) efforts to implement the Mandate; b) compliance with Circular 1/2020 related to air travel emissions.
  • The requirement to review use of paper has been amended to include the need to eliminate paper-based processes and, where this is not possible, to use recycled paper as the default.
  • The requirement to achieve formal environmental certification has been amended with distinct requirements for organisations spending more or less than €2m per annum on energy.
  • A requirement to implement Green Public Procurement (GPP) has been added. This should be performed in line with the EPA Green Public Procurement Guidance.
  • The requirement to create bicycle friendly buildings has been amended to indicate that the priority should be to facilitate moving away from individual car use.
  • A new requirement to phase out the use of parking in buildings, without compromising on supports for those with physical mobility issues, has been added.
  • New recommendations for retrofitting large building have been added.
  • The requirement to procure zero-emission vehicles only has been amended to include a requirement that any procurement contracts a public sector body enters into should use zero emissions vehicles whenever possible.

Contributors
                                                    

Vincent Teo | Partner & Head of Public Sector & Government Services

Vincent Teo
Partner & Head of Public Sector & Government Services

 Dr. Conor Dowling | Research & Policy Executive | Risk Consulting

Dr. Conor Dowling
Research & Policy Manager
Risk Consulting
/by

Non-Resident Landlord Withholding Tax (NLWT) System

, ,

Non-resident landlords may have received a letter from Revenue advising of upcoming changes to the administration of withholding tax for non-resident landlords. Up to now, non-resident landlords had two options to report rental profits to Revenue:

  1. Non-resident landlords asked their tenant to withhold 20% of the rent and to pay this to Revenue on their tenant’s personal income tax return. The tenant should have given the non-resident landlord a Form R185 (certificate of income tax deducted) so that a credit could be claimed for the tax deducted when submitting a personal income tax return.
  2. Non-resident landlords appointed a Collection Agent, who registered for Income Tax on their behalf using a Collection Agent Income Tax Registration Form. Their Collection Agent was responsible for reporting the non-resident landlord’s rental profit for the year by filing an income tax return and paying any liability to Revenue on behalf of the non-resident landlord.

What are the upcoming changes?

A new Non-Resident Landlord Withholding Tax system is expected to go live from 1 July 2023 which will see changes to the obligations of tenants, collection agents and non-resident landlords.

  1. Tenants will be required to withhold and pay to Revenue 20% of the rent by making a rental notification through the new withholding tax platform. They will not be responsible for paying the 20% tax deducted on their personal income tax return.
  2. Collection Agents will no longer be responsible for filing an income tax return. A Collection Agent will be required to withhold and pay to Revenue 20% of the rent by making a rental notification through the new withholding tax platform.
  3. Non-Resident Landlords will be responsible for filing their personal income tax returns. A credit will be allowed for the tax withheld in the new system.

What actions are required by non-resident landlords?

If you are a non-resident landlord whose tenants already withhold 20% of the rent or if you have appointed a Collection Agent, there are no actions required by you at this time.  Further information will be released by Revenue shortly and a new Tax and Duty Manual will be published in due course.

All other non-resident landlords must now decide whether they want their tenants or a collection agent to withhold and pay to Revenue 20% of the rent under the new Non-Resident Landlord Withholding Tax system and take action accordingly.

Please contact us if you have further queries on this.

/by

Tax Treatment of Unapproved Share Option Schemes

, ,

tax treatment of unapproved share option schemes

Employee share incentive schemes can be an effective way of offering tax savings to employees in addition to encouraging employee participation and loyalty. One type of share incentive scheme is an unapproved Share Option Scheme. We have set out below some frequently asked questions on the tax treatment of unapproved Share Option Schemes:

What do I receive when I am granted a share option by my employer?

When your employer grants you a share option, you receive the right to acquire shares in the company at a future specified date at a pre-determined price.  You must actually exercise the option in order to take beneficial ownership of the shares.

What information will I get from my employer when I am granted a share option?

Your employer will generally issue documentation covering:

  • The number of shares that you can acquire,
  • The price that you have to pay for the shares (“Option Price”),
  • The dates from which, and by which you can exercise your option (“Exercise Period”), and
  • The conditions regarding the right to exercise the option, which may include good leaver and/or bad leaver provisions.

What is meant by “date of exercise”?

The “date of exercise” is the date at which the employee takes up their right to acquire shares.

Must I pay to acquire the shares under a share option?

The shares may be at no cost to the employee (nil option) or at a predetermined price that the employer has set. In some cases, the employee will have to pay something for the option itself.

Are there different types of unapproved share option schemes?

There are two types of share options for tax purposes:

(a) a ‘short option’ – which must be exercised within seven years from the date it is granted; and

(b) a ‘long option’ – which can be exercised more than seven years from the date it is granted.

There are tax implications for employees participating in unapproved share option schemes and reporting obligations for both employers and employees:

Tax Implications for Employees

Date of grant

There is no tax or reporting obligations due at the grant of short options. Where a share option is a long option, a charge to income tax may arise on both:

  1. The grant of the share option (where the option price is less than the market value of the shares) and
  2. The exercise, assignment or release of the share option.

Credit is given for any income tax charged on the grant of the share option against the income tax due on the exercise, assignment or release of the share option.

Date of exercise

When an employee exercises his/her right to the share options and acquires the shares at the pre-determined price, the difference between the price paid to acquire the shares (the exercise price) and the market value of the shares at the date of exercise of the option is called the share option gain. The share option gain can be reduced by any payment made by the employee for the initial grant of the option.

Where an employee exercises a share option he or she must pay what is referred to as “Relevant Tax on Share Options” (RTSO) in respect of any income tax due on any gain realised on the exercise of the share option.  The relevant tax at 40% is calculated on the share option gain as well as universal social charge (USC) at 8% and PRSI at 4% (unless you have advance approval from Revenue to pay at a lower rate).  RTSO is payable within 30 days of an option being exercised.

Example

Stock Option Exercise
Exercise of Shares
Market Price @ date of purchase $100
Purchase price $85
$15
Number of shares 10 shares
Total exercise price $150
FX rate at date of purchase 1.1014
Share Option Gain €136
Tax on exercise
Gross Gain €136
Income tax @ 4% €54
USC @ 8% €11
PRSI @ 4% €5
Total liability €71
Net Gain €65

 Sale of Shares

An employee who acquires shares by the exercise of a share option is chargeable to capital gains tax (CGT) on any chargeable gain realised on the subsequent disposal of those shares.

Where due, CGT must be paid to Revenue within the following deadlines:

Date of Disposal Payment Due
1 January – 30 November By 15 December the tax year
1 December – 31 December By 31 January in the following tax year

An individual must file a return by 31 October in the year after the date of disposal. A return is required even if no tax is due because of reliefs or losses. An individual must file a Form CG1 if not usually required to submit annual tax returns; Form 12 if a PAYE worker or a Form 11 if considered a chargeable person for tax purposes.

Reporting obligations for Employees

The employee must submit a Form RTSO 1 within 30 days from the date of exercise of the share option. A payment of Relevant Tax on Share Options must also accompany the submission.

Employees liable to pay RTSO must then submit an income tax return, containing details of all share option gains in a tax year, by 31 October following the year in which the gains are realised. The income tax return must be filed for the relevant year in addition to the form RTSO1.

Reporting obligations for Employers

The employer will have to complete and file a Form RSS1 by 31 March following the year of exercise.

Please contact us if you require assistance with the above.

/by

Director Obligations to Disclose PPS Number

,

Director Obligations to Disclose PPS Number

Have you disclosed your PPS number to the CRO?

From 23 April 2023, all Company Directors of Irish companies have a statutory filing obligation to disclose their Personal Public Service (PPS) Number to the Companies Registration Office (CRO).

PPS Numbers are to be disclosed when filing the following forms:

  • Form A1 – Incorporation Application.
  • Form B1 – Annual Return.
  • Form B10 – Change of company officers or their particulars.
  • Form B69 – Notice of cessation of company officer where a company has failed to file the notice.

What is a PPS Number?

Your PPS Number is a unique reference number that helps you access social welfare benefits, public services and information in Ireland.

A PPS Number is always 7 numbers followed by either one or 2 letters. It is sometimes called a PPSN.

You have a PPS Number if:

  • You were born in Ireland in or after 1971
  • You started work in Ireland after 1979
  • You are getting a social welfare payment
  • You are taking part in the Drugs Payment Scheme

Note: The CRO plan to redact the PPS Number from all forms, by placing hashes over the numbers and letter(s). No publicly accessible form or document will display your PPS number.

What if I do not have a PPS Number?

If a director does not have a PPS number but has been issued with an RBO number by the Central Register of Beneficial Ownership, then the director can use their RBO number as their Verified Identity Number (VIN) for CRO filings.

If a director does not have a PPS Number or an RBO Number, they must apply to the CRO for a VIN which will be issued by the CRO.

Consequences for non-compliance

This new requirement is being introduced to help with the identification of directors and to prevent fraud.

A director that fails to comply with the regulations commits an offence under Section 35 “888A (2)” of the Companies (Corporate Enforcement Authority) Act 2021 and shall be guilty of a category four offence.

What should you do next?

We strongly advise all clients who have not already provided us with their PPS number, RBO number or obtained a new VIN to do so, as a matter of urgency, to avoid any material discrepancies and delays with the next in-scope filings due at the CRO.

Directors should further ensure that the information held at the DEASP with the PPS number is consistent with the information held at the CRO.

Please email our Corporate Compliance Team if you require any assistance.

/by

Vacant Homes Tax & Pre-Letting Expenses

, ,

Vacant Homes Tax

A new Vacant Homes Tax (VHT) was introduced in Budget 2023. The primary objective of this is to increase the availability of housing, but landlords need to be aware of the restrictions on allowable pre-letting expenses when calculating their rental profits.

Vacant Homes Tax (VHT)

VHT applies to residential properties which have been occupied for less than 30 days in a chargeable period.

VHT is calculated at three times the residential property’s local property tax (LPT) liability.

The following will be exempt from the VHT:

  • Properties recently sold or listed for sale or rent.
  • Properties vacant due to illness or long-term care of the occupier.
  • Properties which were the principal residence of a deceased chargeable person in either the chargeable period or in the 12-month period prior to the commencement of the chargeable period.
  • Properties which were the principal residence of a deceased chargeable person where a grant to administer the estate issues in the chargeable period and for any chargeable period following such a grant, where the administration of the estate has not yet completed.
  • Properties which are vacant due to significant refurbishment work.

The first chargeable period runs from 1 November 2022 to 31 October 2023.

A VHT return will be due by 7 November 2023, with the tax payable by 1 January 2024.

Pre-Letting Expenses

In determining the taxable rental profits from the letting of residential property, a landlord may claim a deduction for the following expenses:

  • Private Residential Tenancies Board (PRTB) registration.
  • Insurance premiums.
  • Maintenance & repairs – e.g., cleaning, painting and decorating, general property maintenance.
  • Property fees – e.g., management fees, letting advertising, legal or accountancy fees.
  • Costs not repaid by tenant – e.g., light & heat costs.
  • Capital allowances on qualifying capital items – e.g., furniture, white goods.

However, with the exception of property-related fees such as letting or legal fees incurred on the first letting, a deduction is not permitted for expenses incurred prior to the first letting of the property.

The Finance Act 2017 sought to address the above and introduced an allowable deduction of up to €5,000 for certain pre-letting expenses incurred on vacant residential properties. From 1 January 2023, this cap on the authorised deduction has been increased to €10,000 and the specified period for which the property was vacant has been reduced from twelve to six months. The landlord must incur the expenditure during the twelve months prior to first letting the property.

If the landlord ceases to let the property within four years, the deduction for the pre-letting expenses will be clawed back in the year in which the property ceases to be let as a residential property. Importantly, a clawback will be triggered if there is a change of use from residential or if the property is sold.

If you need any assistance with VHT or Pre-Letting Expenses, please contact Niall Grant, Partner in our Tax Services’ Department.

/by

Rent Tax Credit

,

Rent tax credit

Budget 2023 saw the introduction of a new Rent Tax Credit which is available from 2022 to 2025.

The credit is 20% of the rent paid in a year, up to a maximum credit of either €500 for an individual or €1,000 for a couple, for:

  • A person’s principal private residence (i.e. sole place of residence).
  • A person’s ‘second home’ which they use to facilitate their attendance at their employment, office holding, trade, profession or a Revenue approved college course.
  • A property used by a child to facilitate their attendance at a Revenue approved college course.

Qualifying rents are any amounts paid in return for the use, enjoyment and special possession of the property but does not include payments made for security deposits, repairs or maintenance or any other services such as board, laundry, etc.

The main conditions of the relief are as follows:

  • The property must be a residential property located in Ireland.
  • The payment must have been made under a tenancy. Tenancy for rent tax credit purposes must fall under one of the following categories:
    • An agreement or lease which is required to be registered with the Residential Tenancy Board (RTB).
    • A licence for use of a room(s) in another person’s principal private residence. These arrangements are commonly known as “rent-a-room” or “digs”. (No RTB registration is required under these licences).
    • A tenancy for 50 years or more.
    • Tenancies under “rent to buy” arrangements.
  • The landlord and the individual making the claim cannot be parent and child. If they are otherwise related the credit may be available as long as the RTB registrations have been complied by. Therefore, the credit is NOT available where the tenancy is under different arrangements such as “digs” or “rent-a-room”.
  • The individual must not be a supported tenant (in receipt of any State housing supports such as HAP or RAS).
  • The landlord must not be a Housing Association or Approved Housing Body.

You can claim the Rent Tax Credit for rent paid during 2022 by submitting a 2022 Income Tax Return to Revenue.  For 2023 and subsequent years the claim can also be made in-year using Revenue’s Real-Time Credit Facility.

If you are not registered for self-assessment, you can submit your Income Tax Return via Revenues’ MyAccount. By selecting “Review your Tax 2022” and requesting a “Statement of Liability”, you can input the information under the “Tax Credits & Reliefs” page.

The Real Time Credit Facility for 2023 and subsequent years enables you to claim the Rent tax credits in during the year. To claim the credit you must select “Manage your Tax 2023” and “Add new credits”, there it will give you the option to add the “Rent tax credit” and input the relevant information. Once the claim has been processed by Revenue, an amended Tax Credit Certificate is issued, and an amended Revenue Payroll Notification will be made to your employer.

For further information about the Rent Tax Credit, please contact us.

/by

Guide to Global Mobility – Managing Tax Obligations of Inbound Workers

,

As remote working becomes more popular, employees are no longer obliged to work at their employer’s premises or indeed in the same country as the employer’s premises. This presents a number of opportunities and challenges for employers.

In the second of this global mobility series, we focus on the payroll tax compliance obligations for foreign employers with employees working in Ireland under a foreign contract of employment (inbound workers).

This can occur where:

  1. an employee relocates to Ireland, or
  2. an employer sends an employee to Ireland for a short period to fulfil part of a contract e.g. as part of a construction or installation project.

The basic rule is that all foreign employers must register as an employer in Ireland and operate Irish payroll taxes on any salary attributable to employment duties carried out in Ireland by their employee. This applies even if the employer has no business premises in Ireland or the employee is working from home in Ireland. It applies irrespective of the tax residence status of the employee.

There are a number of exceptions to this rule, which come as a welcome release for foreign employers:

  1. Business visits of up to 30 workdays in a year

    A foreign employer need not operate Irish payroll taxes on the salary of an employee who is employed under a foreign contract of employment and carries out the duties of that employment in Ireland for no more than 30 workdays in aggregate in any year.If the employee exceeds the 30 workday threshold and an obligation to operate Irish payroll taxes exists, the employer must operate Irish payroll taxes from the employee’s first workday in Ireland.

  1. Business visits greater than 30 workdays and not more than 60 workdays per year

    A foreign employer can rely on this exception where an employee who is employed under a foreign contract of employment visits Ireland and is a resident of a country with which Ireland has a Double Taxation Agreement. In addition, the Double Taxation Agreement between Ireland and the employee’s country of residence must relieve the employment income from the charge to Irish tax. Not all Double Taxation Agreements are the same and foreign employers wishing to rely on this exception should examine the wording of the relevant Agreement carefully to establish if their employee’s employment income is relieved from the charge to Irish tax.Where the employment income of the employee is not relieved from the charge to Irish tax under the Double Taxation Agreement or where the workdays in Ireland exceed 60 and there is no PAYE dispensation in place, the employer must operate Irish payroll taxes from the employee’s first workday in Ireland.

  1. Business visits greater than 60 workdays and not more than 183 days per year

    The conditions for this exception are the same as those for business visits between 30 and 60 workdays. However in addition, a foreign employer must apply to the Irish Revenue authorities for a dispensation from the requirement to operate Irish payroll taxes on the employee’s salary. There are a number of conditions to be satisfied before the Revenue authorities will grant a foreign employer the dispensation:

    (i) The foreign employer must register as an employer in Ireland;

    (ii) The foreign employer must apply in writing to Irish Revenue for the dispensation giving the employer’s full name, its address, its Irish employer’s registration number and confirmation that the relevant Double Taxation Agreement relieves the employment income from the charge to Irish tax.

    The application for a dispensation must be made within 30 days of the foreign employee starting to carry out their employment duties in Ireland. An application can cover more than one employee but a new application must be made each year.

    Where an application for a dispensation is not sought within 30 days of the employee taking up duties in Ireland, Irish payroll taxes must be operated on any salary paid to the foreign employee from the date the employee takes up duties in Ireland.

    If Revenue refuse to grant a dispensation, Irish payroll taxes should be operated on salary in respect of all workdays spent in Ireland in the year.

This article has dealt with the Irish payroll tax compliance obligations for foreign employers with an employee who is engaged under a foreign contract of employment working in Ireland. Where a foreign employer must operate Irish payroll taxes on an employee’s salary, Irish social security contributions (PRSI) are also due unless there is a valid certificate of coverage or exemption in place.

In addition, depending on the number of employees that the employer has in Ireland and the type of duties they carry out, the presence of an employee in Ireland may create a “permanent establishment” of the employer in Ireland. If an employer has a branch or permanent establishment in Ireland, it may be obliged to pay Irish corporation tax on the profits of that branch. For employers in the construction sector, there could be a requirement to register for Value-Added Tax and or relevant contracts tax (RCT).

For more information, please contact Siobhán O’Hea, Partner in our Tax Services’ Department.

/by

Tax Relief on Third Level Tuition Fees

,

Tax-payers who pay third level fees on their own behalf or on behalf of another person will be happy to know that they can claim tax relief.

Tax relief at the standard rate is available in respect of certain third-level tuition fees paid to approved colleges. Revenue publishes a list each year of both private and public colleges approved for tax relief. The relief is given by way of a tax credit equal to the fees paid multiplied by 20% (the standard rate of tax). A credit for third level fees cannot result in an income tax refund.

What is an Approved College?

Revenue have provided guidance on what constitutes an approved college. This is a college or higher education institute in the state which provides approved courses (definition below) or an institute in the UK or another EU Member state which is maintained by recurrent grants from public funds of any EU Member State. The college in either the Irish State, the UK or in an EU Member State must be a duly accredited university or institution of that country.

What is an Approved Course?

Revenue have also provided guidance on what constitutes an approved college course. A full-time or part-time undergraduate course must be at least two academic years. A postgraduate course leading to a postgraduate award based on a thesis or on the results of an examination or both, which is between one to four years and requires the student to have a prior degree or an equivalent qualification.

Who can claim & how much can be claimed?

An individual can only claim the relief if they themselves incurred the cost of the fees. Relief is calculated on aggregated fees paid subject to a maximum of €7,000 per person, per course, per academic year where the first €3,000 (full-time) or €1,500 (part-time) is deducted.  The general effect of this is that claimants who are claiming for more than one student will get full tax relief for 2nd and subsequent children in their claim.

Relief does not extend to payments such as registration fees, administration fees or student accommodation.

If in receipt of any grant or payment towards the fees, this must be deducted from the claim being made when claiming the relief.

How to claim tuition fees?

There is no specific form required to claim relief for tuition fees paid for third level education courses. An individual can use PAYE services in myAccount to apply for relief for tuition fees by completing the Form 12 or if income tax registered can claim this through their yearly tax return.

Should you require any further information or assistance in claiming the tax relief, please contact us.

/by