Tax alert Ireland Significant changes to the tax treatment of non-Irish employments exercised in Ireland Executive Summary
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18 January 2017
Significant changes to the
tax treatment of non-Irish
employments exercised in
The Irish Revenue released an
on 22 December 2016 highlighting a
number of updates to their Statement of Practice IT/3/07, which provides
guidance on the operation of PAYE for non-Irish employments exercised in
The amendments to the Statement of Practice will significantly limit the
circumstances in which exemption from Irish tax may be claimed in respect of
short term business travellers, and may bring many, who spend more than 30
workdays in Ireland in a tax year, within the scope of Irish tax.
Where an employee of a non-Irish employer performs duties in Ireland, it may be
possible in certain circumstances, to claim income tax relief where the employee
is tax resident in a country with which Ireland has a double taxation agreement
The specific conditions for exemption from income tax are outlined in the
Employment Article of each DTA, but typically, the following conditions must be
1) the individual must be present in Ireland for no more than 183
days in any 12 month period beginning or ending in the fiscal year
2) their remuneration must be paid by, or on behalf of, an employer
who is not a resident of Ireland; and
3) their remuneration is not borne by a Permanent Establishment
which the employer has in Ireland.
If you require further information, please
call your regular contact in EY or contact
any of the following:
T: +353 1 4750555
T: +353 1 4750555
T: +353 1 4750555
Where the conditions are met, the employer can apply to Revenue for permission not to operate PAYE.
As noted above, the non-Irish employee must be ‘paid by, or on behalf of, an employer who is not a resident of Ireland’. In
determining whether this condition is met it is necessary to understand which entity is regarded as the “employer” of the
individual while they are working in Ireland.
In the recent update to the Statement of Practice, Revenue have stated they will not accept that the remuneration is paid by,
or on behalf of, an employer who is a resident of another DTA State where the individual is:
1) working for an Irish employer where the duties performed by the individual are an integral part of the business
activities of the Irish employer, or
2) replacing a member of staff of an Irish employer, or
3) gaining experience working for an Irish employer, or
4) supplied and paid by an agency (or other entity) outside the State to work for an Irish employer
Furthermore Revenue have stated that PAYE clearance will not be granted (i) simply because the remuneration is paid by a
foreign employer and charged in the accounts of a foreign employer or (ii) where the remuneration is paid by a foreign
employer and the cost is then re-charged to an Irish employer.
The restrictive interpretation set out in the Statement of Practice will significantly limit the possibility of claiming treaty
exemption for business travellers to Ireland and will bring many short term business travellers within the scope of Irish tax.
However, it is worth noting that the exemption will still apply to those short term business travellers who are not carrying on
activities in Ireland in the circumstances outlined above and where the remuneration is not recharged to an Irish corporate.
The Statement does confirm that the existing exemption which is available for business travellers who have no more than 30
workdays in Ireland in the tax year will remain in place. This exemption is available to business travellers who are tax resident
in any country, regardless of whether Ireland has a DTA with that country.
Employers will need to consider the impact of the Revenue’s updated guidance on their mobile assignee population and on
business travel to Ireland. If you have any questions please contact a member of the team listed above.
EY are engaging with Revenue to understand the full implications of Revenue’s change in practice and will provide an update
in due course.
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