Inward Employees

Irish Employment & PAYE

A wholly foreign employment is taxed under Schedule D, Case III, as a possession outside the State. This is the case if the employer is foreign, the contract of employment is governed by foreign law, and the employment is paid abroad.

Income from an office or employment attributable to the performance of duties in Ireland is subject to income tax under Schedule E. PAYE applies to Schedule E for all emoluments. PAYE automatically applies to the remuneration in this case.

If there is no Irish resident employer, then under certain circumstances, the local employer for whom the employee works may be subject to PAYE obligations even if the salaries and wages are not paid directly through them.

Employees of a contractor working for another person who is not their employer are mobile workers, as defined. The person for whom they work is potentially obliged to deduct PAYE if it appears that the employer will not operate PAYE deductions.

A direction may be made to the person for whom they work to deduct tax under the PAYE system. This applies regardless of the fact that they may be paid by their employer. The deductions would effectively be under the contract. Where an employee of a non-resident employer works in Ireland for a person who is not an employer and the employer does not operate PAYE, then the person for whom the individual works is deemed to be the employer and must operate PAYE.

An employee may carry out duties both in Ireland and abroad. In this case, only the parts which relate to the performance of employment duties in Ireland may be subject to Schedule E and PAYE. If it is unclear which part is subject to Schedule E and PAYE, the employer may apply to Revenue for a direction as to the proportion of income on which PAYE should be deducted. Otherwise, PAYE must be deducted on the whole amount.

PAYE Dispensations

An employer of a temporary assignee may not be obliged to operate PAYE if certain conditions are satisfied. PAYE is not required to be operated by a non-resident employee (employed under a foreign contract of employment) who performs incidental duties of employment in Ireland for less than 30 working days in total in the tax year. PAYE must be operated retrospectively from the first day if the 30 working days limit is exceeded.

PAYE is not required for a temporary assignee who qualifies under the conditions of an applicable  Double Taxation Agreement in relation to employment income. If the individual concerned is

• non-resident for more than 183 days in a 12-month period beginning or ending in the tax year concerned,
• there is a genuine foreign office of employment, and the
• individual is paid by that foreign employer and not by the Irish employer, and the remuneration is not borne by a permanent establishment which the employer has in Ireland,

then relief may be granted. The exact terms will depend on the double taxation agreement concerned.

Temporary assignees from DTA countries between 60-183 working days who are granted  Revenue granted dispensation, and who meet the conditions of the Double Taxation Agreement  are not required to operate PAYE.

If the employee does not qualify as being a resident of the DTA country, then PAYE applies once they have been resident for more than 30 days in Ireland. The 60 and 30 refers to working days; 183 applies to days.

To qualify for dispensation from PAYE obligations in the case of DTA residents between 60 working days and 183 days, the employer must be registered in Ireland for PAYE and maintain a

• record of the employee’s name, Irish and overseas address,
• commencement and cessation of the temporary assignment,
• location where the individual carries out duties of the assignment, and
• amount of earnings.

A letter must be sent to Revenue detailing and confirming that these conditions are satisfied, and clearance must be sought within 30 days of the employee taking up duties.

Subject to conditions, tax-free travel and subsistence for 12 months may be available to employees who come to Ireland on a temporary assignment as defined. Tax-free subsistence for 12 months may be claimed if the assignment does not exceed 24 months.

Special Assignee Relief Programme (SARP)

SARP provides relief from income tax on the part of income earned by an employee who works a minimum of six months in Ireland, assigned from abroad, or transferred by their employer to work in Ireland under an Irish contract. The relief may be claimed for up to five consecutive years. The regime has changed on a number of occasions and is determined by the date of arrival.

A person may qualify for SARP relief if they are:

• Resident in Ireland for tax purposes
• Performing duties of employment with the relevant employer or associated employer
• Have income of at least €75,000 (after 1 January 2023, €100,000)

A qualifying employee is one who arrives in Ireland at the request of the employer to perform duties of employment in Ireland for that employer full-time, or takes up employment with an associated company of the relevant employer to perform duties in Ireland for that company. He or she must have performed the duties of employment with the employer concerned outside Ireland for at least 6 months before arrival.

Where the conditions are met, the employee is entitled to have a specified amount of income disregarded. This is 30% of the amount above €75,000 (or €100,000 after 1 January 2023). The amount is calculated based on the employee’s income, profits, and gains from employment in Ireland, excluding amounts not assessed for tax in Ireland and after deducting contributions to qualifying pensions. Expenses incurred in relation to the employment and amounts for which the employee is entitled to double taxation relief are excluded. The maximum amount is €1 million in respect of the year 2020 and afterwards.

The claim may be made for five successive years after the tax year in which the employee is first entitled to relief. If the person is less than a full year in Ireland in the first or last year, the €100,000 amount is apportioned downwards.

SARP Conditions

The person must perform duties

• for a minimum of 12 consecutive months from the date they first performed in Ireland,
• was not tax resident for the five years preceding the date on which they first arrived, and
• the employer certifies to the Revenue in a prescribed form within 90 days of arrival that the employment meets the conditions.

The employer must be incorporated and tax resident in a country with which Ireland has a Double Taxation Agreement or Tax Information Exchange Agreement. An associated company means one that is associated within the meaning of the Taxe Act (i.e., under common control).

Relevant income in relation to an employee means income, profits, and gains from the employment, including amounts for which a deduction is claimed excluding benefits in kind, benefits in kind by virtue of a car made available for employment, benefits in respect of professional loans, ex gratia termination payments, bonus payments, share option gains, and share-based remuneration provided by or on behalf of the employer or associated employer, payment under restrictive covenants are excluded.

SARP Administration

he employee must obtain a PPS number within 90 days, and the employer company must certify compliance. Application for certification must be made within 90 days of arrival. The person may not qualify for this relief and also foreign employment deduction, cross-border relief, or research and development relief for key employees.

The employer or associated company must make an annual return to Revenue including details of:

• Taxpayer and PPS number
• Nationality
• Countries from which they arrived prior to arrival in Ireland to perform duties
• Job and brief description of the role while claiming SARP
• Amount of income, profits, and gains on which tax is not deducted via payroll
• Details of any increase in employment by the employer or associated company as a result of the assignment

Tax Free Benefits

In a year which a person is entitled to claim SARP relief, the following may be reimbursed or paid by the employer free of tax:

• Reasonable costs associated with one return trip from Ireland for the employee’s spouse, partner, and child to the country of residence prior to arrival
• Country of residence at the time of first employment or the country of which the employee’s spouse or partner is a national
• Cost of school fees not exceeding €5,000 per annum for each child of the employee or their spouse/partner, paid to a school established in Ireland with the approval of the Minister for Education for the purpose of primary or post-primary education

Social Insurance

In principle, an inbound assignee is subject to PRSI from day one. A certificate of coverage may be available under an EEA arrangement or double social security convention. An A1 certificate is applied for from the Department of Social Protection in relation to the EEA social security regulation. This determines the application of social security.

The EEA regulation provides for an exclusion for 1 to 2 years. It can continue for an employee assigned to another EEA state who may contribute to the Irish system and be exempted from the host system for up to 5 years with the agreement of the parties. A form A1 must be applied for in advance.

Taxation of Foreign-Domiciled Persons

A foreign-domiciled person is liable to income tax on foreign non-employment income to the extent it is remitted into Ireland. They are responsible for income tax on foreign employment income to the extent that they perform the duties of employment in Ireland.

A person can be abroad but remain ordinarily resident. An ordinarily resident person is taxable on worldwide income with the exception of:

• A trade or profession, no part of which is carried out in Ireland
• Office or employment, all duties of which are carried out outside Ireland (except incidental duties of less than 30 days)
• Other foreign income not exceeding €3,810. If the individual whose non-resident but ordinarily resident has other income exceeding €3,810, the full amount of the other income will be taxed and not just the excess element.