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Ireland - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency rules

Are there special residency considerations for short-term assignments?

Yes.

Payroll considerations

Are there special payroll considerations for short-term assignments?
 

Yes.

Incidental duties
 

The exercise of incidental duties in Ireland for no more than 30 days in aggregate in a tax year, should not give rise to a tax charge.

Short-term business trips
 

Revenue will not require an employer to operate PAYE where an application for treaty exemption is made and the following conditions are satisfied.

  • The individual is resident in a country/jurisdiction with which Ireland has a double taxation agreement and is not resident in Ireland for tax purposes for the relevant tax year.
  • There is a genuine foreign office or employment.
  • The individual is not paid by, or on behalf of, an employer resident in Ireland.
  • The cost of the office or employment is not borne, directly or indirectly, by a permanent establishment in the State of the foreign employer.
  • The duties of that office or employment are performed in Ireland for not more than 60 working days in total in a year of assessment and, in any event, for a continuous period of not more than 60 working days.
  • Effective from 1 January 2020, employers are required to consider the number of workdays spent in the state in a single year of assessment only.

Treaty relief

Exemption from Irish payroll tax may be available under the relevant employment article contained in a double taxation agreement if a clearance in writing from the revenue commissioners is made within 30 days of the date the assignee takes up duties in the State.

Of note is a recent update to the Statement of Practice in April 2018. In summary, the updated Statement of Practice significantly limits the circumstances where Irish payroll withholding exemption (referred to as PAYE Clearance) would be permitted.

Revenue released further update to the guidance in January 2020. Effective from 1 January 2020, employers are required to consider the number of workdays spent in the state in a single year of assessment only. The de minimis rules are complex and advice should be sought.

Taxable income

What income will be taxed during short-term assignments?

In general, income derived from Ireland and income derived from employment duties exercised in Ireland.

Tax free subsistence may be paid or reimbursed for the first 12 months of a temporary assignment provided the period of assignment in Ireland does not exceed 24 months.

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Ireland?

Exemption from Irish tax may be available under the relevant employment article contained in a double taxation agreement. An application must be made to be excluded from the requirement to operate PAYE.

 

Disclaimer

All information contained in this publication is summarized by KPMG Ireland, the Irish member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Irish tax, social security and immigration legislation in force for the period 1 January 2020 to 31 December 2020.

© 2021 KPMG, an Irish partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.

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