Ireland - Irish tax authorities update guidance on employment performed predominantly outside Ireland

Ireland’s Revenue on 21 July updated their online guidance on the payroll tax position for non-resident employees who perform duties both in Ireland and abroad under an Irish employment contract.

Previously, if a non-resident employee worked more than 30 workdays in Ireland, the employer was concessionally allowed to operate Irish payroll withholding for that employee based on the portion of income relating to Irish duties only. Furthermore, there was no obligation on the employer to obtain prior formal approval from Revenue to apply this treatment.

Revenue have now updated their position to require that the employer obtain prior authorisation in writing from Revenue before adopting this treatment. In the absence of such prior approval, Irish payroll withholding is required on the employee’s total remuneration. As a result of the new guidance, any Irish employer that is currently applying this treatment on a self-assessed basis will now need to obtain written approval to continue to avail itself of this treatment.

This change in Revenue practice will have no impact on employers with non-resident employees with less than 30 Irish workdays per year if the employer has obtained a PAYE Exclusion Order from Revenue.

The position for foreign employers who have Irish non-resident employees operating in Ireland remains unchanged.

Mark Hynes
BDO in Ireland