Global menu

Our global pages

Close

Irish Revenue announces simplified payroll tax procedures for short-term business visitors

  • Ireland
  • Tax planning and consultancy - Information and guidance

06-07-2020

Overview

On 24 June 2020, Irish Revenue published revised guidance (the “Revised Guidance”) in relation to the operation of Irish payroll tax in respect of short-term business visitors (“STBVs”) to Ireland. The Revised Guidance, which can be accessed here1, should have the effect of significantly reducing the administrative burden on foreign employers in this area. The relevant changes apply from 1 January 2020.

Incidental duties

The Revised Guidance confirms that no Irish payroll tax obligations will arise where a STBV spends less than 30 workdays in Ireland in the tax year. This treatment applies to STBVs, regardless of whether or not they are from a country which has entered into a double tax treaty (“DTT”) with Ireland.

Legal employer relationship

In line with the Revised Guidance, Irish Revenue will no longer focus on how ‘integral’ the duties carried out by the STBV to the Irish business are. Instead, consideration will now be given to the legal employment relationship in place between the foreign employer and the STBV. This marks a departure from the economic employer approach adopted by Irish Revenue in recent years.

Dispensation

Where the conditions set out in the employment article of the relevant DTT are satisfied, Irish payroll tax need not be operated in the case of a STBV who spends more than 60 workdays in Ireland but who is present in Ireland for less than 183 days. However, in these circumstances, the foreign employer will need to apply for a formal dispensation from Irish Revenue within 30 days of the STBV taking up duties in Ireland. Once granted, the dispensation should be renewed on an annual basis, as required. This treatment cannot be availed of by STBVs from non-DTT countries.

Workdays in Ireland

Set out below is a summary of the Irish payroll tax implications based on (1) the number of days/workdays spent by a STBV in Ireland, and (2) whether the STBV comes from a DTT country or non-DTT country.

 

Number of days/workdays

Irish payroll tax implications

DTT countries

Non-DTT countries

Less than 30 workdays in Ireland in the tax year

No Irish payroll tax obligations

No Irish payroll tax obligations

Between 30 and 60 workdays in Ireland in the tax year

No Irish payroll tax obligations*

Irish payroll tax must be operated

More than 60 workdays in Ireland but less than 183 days present in Ireland in the relevant period**

Obtain dispensation or Irish payroll tax must be operated

Irish payroll tax must be operated

More than 183 days present in Ireland in the tax year

Irish payroll tax must be operated

Irish payroll tax must be operated

*Provided that relief under the terms of the employment article of the relevant DTT applies.

**The relevant period will depend on the specific terms of the employment article in the relevant DTT.

With effect from 1 January 2020, each tax year should be considered on a standalone basis. Previously, the presence of a STBV in Ireland for multiple consecutive tax years (even to carry out incidental duties) may have resulted in the requirement to operate Irish payroll tax or to make an application for dispensation from same.

Comment

In addition to reducing the administrative burden on foreign employers, the Revised Guidance is to be welcomed for providing certainty and flexibility in an area which often presents practical difficulties for large companies and multinational corporations. It should also improve cash flow for many STBVs by aligning the Irish payroll tax and income tax liability positions. As such, the Revised Guidance bolsters Ireland’s reputation as a good place to do business at a time when countries are seeking to reignite and renew their economies following the impact of the Covid-19 pandemic.

Foreign employers with STBVs operating in Ireland should now take the time to review the implications of the Revised Guidance on their Irish payroll tax obligations from 1 January 2020. This also represents a good opportunity for such employers to test the robustness of their systems and processes for tracking business travel by STBVs.

For further information, please contact:

Alan Connell, Partner and Head of Tax - alanconnell@eversheds-sutherland.ie

Robert Dever, Associate in our Tax department - robertdever@eversheds-sutherland.ie


https://revenue.ie/en/tax-professionals/ebrief/2020/no-1212020.aspx