The Irish Revenue Commissioners have issued very welcome guidance on a range of global mobility and employment tax issues which provide clarity to employers on these areas during this challenging time. The guidance provides for a number of concessions for the purposes of claiming payroll tax reliefs and exemptions and also provides for a number of extensions to reporting deadlines. Records should be maintained by employers outlining the circumstances of COVID-19 restrictions and have them available to Revenue on request.
Tax relief and exemptions
Revenue have acknowledged that the travel restrictions in place have resulted in employees spending longer periods of time in Ireland than expected which could lead to a breach of the current conditions in place for reliefs from Irish payroll taxes. Revenue have provided for the following concessions for the duration of the COVID-19 pandemic:
- Foreign Employments - Operation of Irish PAYE: Revenue will not seek to enforce Irish shadow payroll obligations for foreign employers in genuine cases where an employee was working abroad for a foreign entity prior to COVID-19 but relocates temporarily to the State during the COVID-19 period and performs duties for his or her foreign employer while in the State. This relief applies only to genuine cases. The standard period for relief from Irish payroll taxes for short term business travellers to Ireland was 60 days in a calendar tax year for residents from countries with which Ireland has a double tax agreement and 30 days for non-tax treaty residents.
- Irish Employments - PAYE Exclusion Order: For non-resident employees who are working abroad for an Irish employer for whom a PAYE exclusion order is in place, the position will not be adversely impacted where the employee works more than 30 days in the State due to COVID-19.
- Trans-Border Workers Relief: This relief can provide relief from Irish tax on a foreign employment exercised wholly outside Ireland in a tax treaty location, (e.g. the UK) once certain conditions are met. These conditions include that the employee returns home at least one day per week and does not perform more than incidental duties of the foreign employment in Ireland. Revenue guidance confirms that days spent working at home in Ireland due to COVID-19 will not preclude the individual from being entitled to claim this relief provided all other conditions of the relief are met.
- Costs of assisting employees returning to the State including payment of holiday/flight cancellations: Provided the employee is integral to the business and was required to return to deal with issues related to the COVID-19 crisis by his or her employer, the costs incurred are reasonable and the employee is not otherwise compensated (i.e. via an insurance policy or direct claim to the service provider), a benefit in kind will not arise. This may include costs related to family members who were on holiday or due to go on holidays with the employee.
- Residence rules - Force Majeure circumstances: Existing guidance states that where an individual is prevented from leaving the State on his or her intended day of departure due to extraordinary natural occurrences or an exceptional third party failure or action – none of which could reasonably have been foreseen and avoided – the individual will not be regarded as being present in the State for tax residence purposes for the day after the intended day of departure provided the individual is unavoidably present in the State on that day due only to ‘force majeure’ circumstances. Where a departure from the State is prevented due to COVID-19, Revenue will consider this ‘force majeure’ for the purpose of establishing an individual’s tax residence position.
Extensions to reporting deadlines and clearance applications
Revenue’s guidance also provides for a number of extensions to payroll reporting or clearance application deadlines:
- Special Assignee Relief Programme (SARP): The 90 day employer filing obligation, which is a requirement for an employee to be eligible to benefit from SARP relief, is extended for a further 60 days. It is anticipated that such an extension should provide sufficient time for employers to file the required return, but exceptional cases may be submitted to Revenue for consideration on a case by case basis.
- PAYE Dispensation Applications: Given the unprecedented circumstances and the restrictions on travel as a consequence of COVID-19, Revenue will not strictly enforce the 30 day notification requirement for PAYE dispensations which is applicable to short term business travellers from countries with which Ireland has a double taxation treaty who are going to spend in excess of 60 workdays in the State in a tax year.
- Share schemes filing obligations: The filing deadline for all 2019 share scheme returns is being extended from 31 March 2020 to 30 June 2020.
- Real-time foreign tax credit (FTC) for Restricted Stock Units (RSU): In respect of 2019 cases for whom real time foreign tax credits were provided through the payroll, the 31 March 2020 filling deadline will be suspended. In such circumstances, the 2019 income tax return for such employees will revert to the standard income tax filing date (31 October 2020) for that return or any extended filing deadline for that return as appropriate. The employer notification to Revenue in relation to such cases should be made as soon as possible but no later than the extended income tax filing date where applicable.
Other employment tax reliefs: The guidance also provides for a number of other employment tax reliefs including:
- a benefit in kind exemption for providing equipment to employees to set up a working space in their homes;
- clarification on the operation of benefit in kind rules for company vehicles;
- tax reliefs available for e-working.
- a benefit in kind exemption on payment of taxi fares for transporting employees to or from work due to health and safety concerns
- minor changes to the small benefit exemption of €500 per year.