COVID-19

Short- term Business Visitors: Updated Revenue Guidance

The Irish Revenue Commissioners have issued much welcomed guidance and clarifications in relation to short-term business visitors (“STBVs”) working in Ireland. The revised guidance applies from 1 January 2020 and will significantly reduce the administrative and cashflow burden for employers in this area.

Employers will need to review their current processes now to ensure that they meet the requirements of the new rules to avail of PAYE exemption.

Summary of key changes

There are a number of significant changes including:

  • Less than 30 workdays in the tax year: No Irish PAYE obligation will arise. This applies to both temporary assignees from DTA countries and non-DTA countries.
  • Less than 60 workdays in the tax year: No PAYE obligation where relief under the terms of the employment article of the relevant DTA applies as follows:
  1. the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned, and
  2. the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
  3. the remuneration is not borne by a permanent establishment which the employer has in the other State.
  • Revenue have set out their interpretation of the above employment article. In a change from previous practice, Revenue will consider the legal meaning of the term “employer” in determining which entity is the employer entity rather than the economic employer approach which they previously applied.
  • More than 60 workdays but less than 183 days present in the tax year: In all such cases where the conditions of the employment article of the relevant DTA are met, Revenue will not enforce the operation of PAYE, however, the foreign employer or “relevant person” should apply for a dispensation from the operation of PAYE for the temporary assignee. This should be a much simplified process than previously given Revenue’s change in position on the economic employer approach.
  • The 30-day time limit for application for dispensation from the operation of PAYE remains in place.
  • With effect from 1 January 2020, each year should be considered on a standalone basis.
  • Revenue have also clarified the tax treatment of bonuses which are paid under the terms of a non-Irish contract of employment, which may or may not have been earned in the State.
  • With regard to inbound assignee cases, Revenue accept that the charge to Irish income tax with respect to bonuses should continue to be charged on an earnings basis (as opposed to the receipts basis). This applies to both individuals who receive a bonus whilst on assignment to Ireland, where all or part of the bonus relates to a pre-assignment period, and individuals who receive a bonus following their departure from Ireland, where all or part of the bonus refers to duties performed in Ireland. Given the operation of the Irish PAYE system on a receipts basis and where the bonus is earned in a different tax year, this may result in additional personal tax compliance obligations for employees.

 

Summary of Position with effect from 1 January 2020

Category

DTA countries

Non-DTA counties

Less than 30 workdays in the tax year

No PAYE obligation

No PAYE obligation

Between 30 and 60 workdays in the tax year

No PAYE obligation (subject to conditions)

PAYE obligation

More than 60 workdays but less than 183 days present in the tax year

PAYE obligation in the absence of a PAYE dispensation

PAYE obligation

More than 183 days present in the tax year

PAYE obligation

PAYE obligation