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Coronavirus - Irish Revenue updates e-working guidance amidst Covid-19 outbreak - Ireland

  • Ireland

    26-03-2020

    Overview

    Employees who are now working from home due to public health concerns may be regarded as ‘e-working’ for Irish employment tax purposes. Broadly speaking, e-working is conducting work using information and communication technology, where the work can be carried out remotely or outside the employer’s office.

    There are certain tax benefits of e-working which employers should be aware of so that staff can be kept fully informed of their entitlements where they are required to work remotely.

    Updated guidance

    Irish Revenue have recently updated their guidance on e-working. Whilst no specific measures have been introduced to date in this area to deal with the challenges associated with the Covid-19 outbreak, Irish Revenue have made it clear that where employees are directed to work from home in light of public health concerns, existing e-working tax reliefs may be available to them.

    Generally speaking, in order to qualify as an e-worker, an employee must work from home for ‘substantial periods’. While Irish Revenue’s previous guidelines did not set out precisely what this entails, the revised guidelines clarify that the current Irish Government’s recommendations for employees to work from home as a result of Covid-19 meet the conditions to avail of the tax relief.

    Tax relief

    Where e-working arrangements are in place, employers are permitted to pay a round sum of up to €3.20 per working day without the requirement to deduct income tax, USC or PRSI. This is aimed at covering additional expenses incurred by relevant employees as a result of working from home, such as heating and electricity costs. Any amount in excess of €3.20 should be subject to tax in the ordinary course.

    Records of payments made to an employee under an e-working arrangement should be kept by employers in case of any future Revenue query or audit.

    Where an employer does not contribute to home expenses, the employee retains the right to claim a deduction in respect of same as expenses incurred wholly, exclusively and necessarily in the course of their employment. While employees in these circumstances are not entitled to claim the round sum payment of €3.20 per day, there is scope for a higher claim to the extent that the expenses actually incurred exceed €3.20 per day. In order to claim such expenses, the employee should include same in their income tax return submitted via myAccount following the end of the tax year. Where the employer reimburses the employee in whole or in part, such amount should be deducted from the employee’s own claim.

    Provision of computers and other equipment

    Where an employer provides an e-worker with certain office equipment to enable them to work from home, and this equipment is used primarily in the course of the e-worker’s employment, a BIK charge should not be imposed in respect of the private use of the equipment (provided such use is incidental). This includes computers, printers, software and office furniture. Also,the provision of a telephone or broadband line should not incur a BIK provided any private use is incidental.

    Irish Revenue guidance covers the temporary provision by an employer of office equipment to an employee for a period of time where they are required to work from home. Where the employee returns to work in the employer’s office (thereby ceasing to be an e-worker) and is allowed to retain office equipment provided, a BIK charge may apply in respect of the continued use of the equipment.

    Comment

    Although no new tax measures have been introduced for e-workers in light of the recent Covid-19 outbreak, recent updates to Irish Revenue guidelines indicate a pragmatic approach by Irish Revenue to existing arrangements which are available to e-workers. This has allowed the above e-working tax benefits to be extended to employees who may not have fallen squarely within the criteria to be regarded as an e-worker for Irish tax purposes. For example, previously, Irish Revenue required that a formal agreement be in place between the employer and the employee which required the employee to work at home in order to avail of these tax benefits, however, this requirement appears to have been relaxed in light of recent public health concerns.

    While Irish Revenue’s guidance on e-working arrangements may not have any direct fiscal benefit for employers, they should provide some assistance to their employees by allowing them to have the necessary equipment at home to carry out their duties remotely where possible and benefit from tax relief for related home expenses.

    Disclaimer

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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