Travel expenses for non–executive directors

Revenue recently issued an e-brief regarding the tax position of travel expenses paid to non-executive directors in attending board meetings. In light of Revenue’s views on the issue, it is important to review the tax treatment of travel expenses paid by Irish companies/funds to their non-executive directors.

The technical position surrounding the tax treatment of directors’ travel expenses is less than clear. In particular, whether or not such expenses were incurred wholly, exclusively and necessarily in the performance of the duties of the office of the director was not always easily ascertainable. However, in practice, payments made to non-executive directors in respect of travel and related costs attending board meetings were typically not treated as taxable payments. In our experience, it was also not an area that was challenged by Revenue.

The recently issued e-brief from Revenue thus appears to represent a change in stance by the Irish Revenue. In the e-brief, Revenue have stated that, in their view, the reimbursement of travel expenses will generally represent a taxable payment, subject to certain limited exceptions. It is worth noting that certain groups are lobbying against this proposed change in practice. At present, there is thus some uncertainty regarding the position of future and historic travel expenses paid to or on behalf of non-executive directors.

In light of the above, we would recommend that the tax position in respect of payments made to non-executive directors attending board meetings be reviewed. If you require any assistance in this regard, please contact us.

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