On 23 March 2020, Irish Revenue released eBrief No. 046/20 in relation to advice and information to assist taxpayers and their agents during the COVID-19 pandemic. The guidance includes a number of matters likely to be of relevance to employers and mobile employees.
Recognising that travel restrictions resulting from the impact of COVID-19 can mean that employees are spending longer periods of time in time in Ireland than expected and may therefore breach conditions in place for reliefs from Irish payroll taxes, Revenue guidance confirms that:
- Revenue will not seek to enforce Irish shadow payroll obligations for employees of a foreign employer who normally work wholly outside Ireland but who relocate temporarily to Ireland as a consequence of COVID-19 and will perform duties for their foreign employer while in Ireland. 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 jurisdictions with which Ireland has a double tax treaty and 30 days for non-tax treaty residents.
- For non-resident employees working abroad for an Irish employer for whom a PAYE exclusion order is in place, the standard condition for this relief from Irish payroll taxes was that the employee did not spend more than 30 workdays in Ireland during the tax year. Revenue’s guidance confirms this will not be adversely impacted where the employee works more than 30 days in Ireland due to COVID-19.
- A taxable Benefit-in-Kind (BIK) will not arise for the reimbursement by an employer of holiday/flight cancellations or costs of assisting employees returning to Ireland. This is provided that the employee is considered to be integral to the business and was required to return to Ireland to deal with issues related to the COVID-19 crisis, the costs are reasonable and the employee is not otherwise compensated for the loss, e.g. by an insurance claim. This can include family members on holiday or due to go on holiday with the employee.
- Irish cross border workers relief (trans-border workers 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 a 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 solely as a result of Covid-19 will not preclude the individual from being entitled to claim this relief provided all other conditions of the relief are met.
- Ireland has a days based test of residence for individuals, with a day counted as including any part of a day spent here. Existing Revenue guidance provides that a day spent in Ireland after an intended day of departure provided the individual is unavoidably present in Ireland due to ‘force majeure’ circumstances can be ignored in computing days spent in Ireland. Where a departure from Ireland is prevented due to COVID-19, Revenue will consider this ‘force majeure’ for the purposes of establishing an individual’s tax residence position.
Recognising also that the COVID-19 crisis has significantly disrupted businesses, Irish Revenue guidance provides for a number of extensions of reporting or clearance application deadlines related to payroll tax matters. These may affect local and mobile employees and include:
- An extension of the reporting deadline for 2019 share scheme returns, such as those related to share option schemes, from 31 March to 30 June 2020.
- An extension by an additional 60 days to the 90 day filing period for employers to make a claim for employee eligibility for Ireland’s expatriate regime under the Special Assignee Relief Programme (SARP). Exceptional cases which do not meet this extended filing deadline can apply to Revenue for consideration on a case by case basis.
- Not strictly enforcing the 30 day notification requirement for a foreign employer (or the local Irish entity as agent) to obtain a PAYE Clearance for the non-application of Irish payroll taxes for a business traveller or foreign employee from a country with which Ireland has a double tax treaty who were due to spend in excess of 60 workdays in Ireland, irrespective of Covid-19.
- An extension of the 31 March 2020 return filing date which applies to both the employer and employee where the employer has applied real time credit relief for foreign tax in taxing the employee’s 2019 restricted stock unit (RSU) awards through Irish payroll. The employee’s tax return filing deadline is extended to the standard income tax filing deadline (31 October 2020) with the employer notification to be made as soon as possible but no later than the employee tax return deadline.
The eBrief notes that Revenue has issued guidance and advice to taxpayers to assist those that are experiencing a range of new circumstances caused by the impacts of the COVID-19 virus. The guidance confirms that a taxable benefit-in-kind will not arise where employers provide equipment such as laptops, printers, scanners and office furniture in order for employees to set up a working space in their homes.
Revenue has also released expanded guidance on the tax treatment of e-workers and remote workers. This sets out the amount of a tax free daily allowance employers can pay to employees to compensate them for additional expenses incurred by them in working at home. Where an employer does not or is not in in a position to provide a payment to the employee, or reimburse them for additional expenses incurred, an employee can make a claim to Revenue for tax relief in respect of actual vouched expenses.
The updated guidance also provides examples which illustrate the eligibility for tax relief of an allocation of home light and heating costs etc as well as details in relation to the method for claiming these expenses.
If you would like to discuss further any of the above matters, please do not hesitate to contact Thalia O’Toole or another member of the KPMG team.