article banner

Revised Revenue Guidelines

Jillian O'Sullivan Jillian O'Sullivan

Foreign employees working in Ireland

Revenue have recently published further guidance to the revised rules which were introduced in early 2017 which deal with employers’ Irish PAYE obligations arising from foreign employees temporarily working in Ireland. The revised guidance applies from 1 January 2018 and will significantly increase the compliance, administrative and cashflow burden for employers in this area.

Employers will need to review their current processes now to ensure they will meet the requirements of the new rules!


Under the new rules which were introduced in early 2017, Revenue were no longer prepared to grant PAYE exemptions in certain circumstances e.g. where the duties performed by foreign employees were an integral part of the business activities of the Irish employer, where foreign employees gained experience working for an Irish employer etc.

The new rules were a significant departure in previous Revenue practice, caused uncertainty for employers in trying to apply the new rules in practice and increased the compliance burden for all employers.  Revenue’s updated guidance seeks to address some of the issues raised by tax practitioners and employers following the release of the revised guidance in 2017 and clarifies the circumstances in which employers will not be required to operate PAYE for foreign employees temporarily working in Ireland.

Summary of key changes

There are a number of significant changes including:

  • Clarity around Revenue’s view of “integral part of the business activities of the Irish employer”. However this is likely to remain an area of ambiguity, subjectivity and contention in terms of interpretation going forward.
  • Guidance on the circumstances when Revenue view a recharge of costs as having taken place.
  • Extension of the time limit, from 21 days to 30 days, for the submission of PAYE exemption applications to Revenue. However the 30 day limit will remain difficult for employers to meet in practice.
  • An application for a PAYE exemption will now be required where foreign employees work in Ireland over a period of two or more consecutive tax years for more than 60 workdays in aggregate.
  • A 30 day threshold for a PAYE exemption will continue to apply for foreign employees working in Ireland from countries with which Ireland does not have a Double Taxation Agreement, but the 30 day threshold now applies over a period of two or more consecutive tax years where visits to Ireland are on a recurring annual basis.
  • Where a particular role or function is performed by different foreign employees, an application for a PAYE exemption is required irrespective of whether each employee spends less than 60 workdays in Ireland.
  • Confirmation that bonuses earned prior to arrival to Ireland will continue to be taxed on an earnings as opposed to a receipts basis. This is a welcome clarification given the application of the receipts basis to employee emoluments from 1 January 2018 in conjunction with the introduction of PAYE Modernisation from 1 January 2019.

Revenue examples

The following examples provided by Revenue help to illustrate the operation of the new rules:

JKL Germany is a company resident in Germany. It specialises in supplying lab technicians to other companies. MNO Ireland needs the temporary services of a lab technician for approximately 4 months, and JKL Germany agree to assign Nathalia to help MNO Ireland to complete their contract. While in Ireland, she is under the direct supervision of the senior lab technician of MNO Ireland. Nathalia is tax resident in Germany.

The services provided by Nathalia are an integral part of business activities of MNO

Ireland. On the making of a payment of emoluments to Nathalia, PAYE must be operated.

Jacques is a senior employee of a French multinational company who is assigned to carry out duties in the State for 40 workdays in Year 1 and 25 workdays in Year 2. He is not expected to return to the State in Year 3. While in the State he assists with the setting up of a new function in the State and imparting knowledge to the local team. He remains under the direction and control of the overseas employer. Treaty relief applies in respect of his employment income.

As the total of Jacques’ workdays in the State exceed 60 workdays over two consecutive tax years, his employer will not automatically be released from the obligation to operate PAYE. Therefore, an application for a release from the obligation to operate PAYE will need to be made by the employer.

How Grant Thornton can help your business

We can help your business to consider the impact of Revenue’s updated guidance on your short term business visitors to Ireland and offer our expert advice tailored to your business’ circumstances.