COVID-19 Update for employers on employment tax and global mobility matters

The Revenue Commissioners has issued guidance in relation to employment tax and global mobility matters for employers.

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Debt Management

Real-time Foreign Tax Credit (FTC) for Restricted Stock Unit (RSU) Cases

Share Schemes Filing Obligations

Special Assignee Relief Programme (SARP)

Trans-Border Workers Relief

Foreign Employments - PAYE Dispensation Applications and Operation of PAYE

Multi-State workers

PAYE Exclusion Orders

Residence Rules - Force Majeure Circumstances

Holiday/Flight Cancellation

Employer-provided Equipment

e-Working and Tax

Payment of Taxi Fares

Small Benefit Exemption

Employer Provided Accommodation

Debt Management 

Where employers are unable to pay PAYE, PRSI and USC liabilities due to the COVID-19 pandemic, Revenue has announced the following measures to assist taxpayers and employers who are experiencing tax payment difficulties:

  • The application of interest on late payments is suspended for all SME*  businesses in respect of January/February VAT and both February and March PAYE (Employers) liabilities.
  • All debt enforcement activity is suspended until further notice.
  • Companies, other than SMEs, who are experiencing difficulties in paying their tax liabilities should contact the Collector-General’s office on (01) 7383663. Alternatively, these companies can engage directly with their branch contacts in Revenue’s Large Corporates Division or Medium Enterprises Division.  

* For tax purposes, an SME is a business with a turnover of less than €3 million who is not dealt with by either Revenue’s Large Cases Division or Medium Enterprises Division. SME’s are managed from both a service and compliance standpoint by Revenue’s Business Division.

Revenue would like businesses to know that they will work with them to resolve their tax payment difficulties. They are encouraging businesses to engage with them early to agree on  payment arrangements that are acceptable to both the business and Revenue. For example, a business may opt to defer a payment in the phased arrangement or apply to suspend the phased payment arrangement for up to six months. Businesses can apply for a Phased Payment Arrangement by contacting the Collector-General’s office on (01) 738 3663 or by using Revenue’s Online Phased Payment Facility.

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Real-time Foreign Tax Credit (FTC) for Restricted Stock Unit (RSU) Cases

Background

Some internationally mobile employees may, in addition to having a liability under the PAYE system in Ireland, also have a liability to income tax in a foreign country on the RSU or a portion of the RSU. Where this arises, and a double taxation agreement is in place with the other country, the individual may be entitled to a credit in relation to any amount subject to double taxation.  As part of the conditions for this, the company had to provide information for 2019 cases to their Revenue district by 31 March 2020, and the individual also had to file his/her 2019 personal tax return by the same date. 

Revenue update 

For 2019, some employees may have received real time foreign tax credits through the payroll. For these cases, Revenue has issued the following guidance:

  • The deadline for the employee to file his 2019 personal tax return has been pushed out to the standard income tax filing date (31 October 2020) for that return or any extended filing deadline for that return as appropriate; and
  • The employer notification to Revenue about such cases should be made as soon as possible but no later than the extended income tax filing date above, where applicable.

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Share Schemes Filing Obligations

Revenue update 

The filing deadline for all 2019 share scheme returns is being extended from 31 March 2020 to 30 June 2020.

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Special Assignee Relief Programme (SARP)

Background

For employees who arrive in Ireland and meet the conditions for SARP relief, certification is required to be made by the employer on Form SARP 1A, for each employee availing of SARP relief, within 90 days of the employee’s arrival in Ireland to perform the duties of his or her employment in Ireland.

Revenue update

Revenue has extended the deadline for filing a SARP1A by a further 60 days.

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Trans-Border Workers Relief

Background

Transborder workers relief is designed to give income tax relief to individuals who are resident in the Republic of Ireland (ROI) but who work outside the ROI. It applies to individuals who commute daily or weekly to their place of work outside the ROI and who pay tax in the other country on the income from their employment. Individuals who travel to the UK and Northern Ireland typically benefit from this relief.

Revenue update

Revenue has stated that if employees are required to work from home in the ROI due to COVID-19, such days spent working at home in the ROI will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met. 

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Foreign Employments - PAYE Dispensation Applications and Operation of PAYE

Background

Where a Short Term Business Visitor (STBV) or short term assignee who holds a foreign employment, from a country in which Ireland has a Double Tax Agreement, works temporarily in Ireland for a local Irish entity, Irish PAYE implications can arise for either the foreign employer or the local Irish entity.  However, where a temporary assignee exercised the duties of employment in Ireland for more than 60 work days but less than 183 days, employers could apply to Revenue for a release from the obligation to operate Irish payroll. Up to now, the application had to be made by employers within 30 days of the employee taking up duties in Ireland.

Revenue update

  • Given the unprecedented restrictions on travel as a result of COVID-19, Revenue will not strictly enforce the 30 day notification requirement for PAYE dispensations.  
  • Revenue will not seek to enforce Irish payroll obligations for foreign employers in genuine cases where an employee was working abroad for a foreign entity prior to COVID-19 but relocates temporarily to Ireland during the COVID-19 period and performs duties for his or her foreign employer while in Ireland.

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Multi-State workers

Background

Where an employee who holds a foreign employment works in Ireland, an Irish PAYE liability arises for the foreign employer on employment income attributable to their Irish workdays only. For employees who have an established work pattern in Ireland (e.g. 2 workdays a week), the PAYE liability will arise on employment income attributable to those workdays.

Revenue update

If a non-resident employee is prevented from leaving Ireland due to travel restrictions arising from COVID-19, they may be required to exercise all of their employment duties in Ireland until the travel restrictions are lifted. The foreign employer can continue to account for PAYE by reference to the employee’s established work pattern in Ireland where:

  • the non-resident employee had been carrying out duties of a foreign employment partially in Ireland and partially in a foreign jurisdiction prior to COVID-19
  • the foreign employer had applied PAYE withholdings in Ireland and payroll taxes in the foreign jurisdiction based on the established work pattern prior to COVID-19
  • the employee cannot return to the foreign jurisdiction as a result of the travel restrictions imposed by COVID-19
  • and
  • the employee continues to carry out their duties of employment in Ireland.

The employee and the foreign employer are required maintain a record of the facts and circumstances of the bona fide relevant presence in Ireland for production to Revenue if evidence is requested that such presence resulted from COVID-19 related travel restrictions

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PAYE Exclusion Orders

Revenue Update

Revenue has stated that where employees who are working abroad under an Irish contract of employment, and where a PAYE exclusion order is in place, Revenue will adopt a flexible approach where the employee works more than 30 days back in Ireland due to COVID-19.

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Residence Rules - Force Majeure Circumstances

Background

Up to now, Revenue guidance stated that where an individual was prevented from leaving Ireland due to extraordinary natural occurrences or an exceptional third party failure or action, none of which could reasonably have been foreseen and avoided, the individual will not be regarded as being present in Ireland for tax residence purposes for the day after the intended day of departure provided the individual is unavoidably present in Ireland on that day due only to ‘force majeure’ circumstances. 

Revenue update

Where an individual is prevented from leaving Ireland due to COVID-19, Revenue will consider the ‘force majeure’ above for the purpose of establishing an individual’s tax residence position.

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Holiday/Flight Cancellation 

Tax treatment of reimbursements by an employer to an employee regarding holiday/flight cancellations or in relation to costs of assisting employees returning to Ireland

Revenue update

Revenue have stated that a taxable BIK charge will not arise where an employee is integral to the business and was required to return to deal with issues related to the COVID-19 crisis by his or her employer, the costs incurred are reasonable and the employee is not otherwise compensated (i.e. via an insurance policy or direct claim to the service provider).

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Employer Provided Equipment

Revenue update

Revenue has stated that a taxable BIK charge 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.

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Employer-provided vehicles

Revenue update

The following applies for the duration of the Covid-19 restrictions in relation to the provision of company car or van to an employee:

(a) Employer Takes Back Possession of the Vehicle

Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no BIK shall apply for the period. 

(b) Employer Prohibits Use

Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle, no BIK shall apply if the vehicle is not used for private use.

Records should be maintained to show that the employer has prohibited its use and no such use has occurred, for example communication from employer, photographic evidence of odometer etc. 

(c) Employer Allows Private Use

Where an employee has a car provided by his or her employer and 

  • the circumstances in the previous example don’t apply
  • limited or reduced business mileage (if any) is undertaken during the period of the COVID-19 crisis
  • personal use is limited 

the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due.  Thus, the percentage applied in the calculation of the cash equivalent, which is based on annualised business mileage, may have regard to the actual business mileage for January 2020, for the period of the COVID-19 restrictions. Appropriate records should be kept, for example business mileage travelled in January, amount of private use, photographic evidence of odometer etc. 

Employee Continues Working

Where an employee continues to undertake business travel as usual in an employer-provided vehicle, the usual BIK rules will apply.

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e-Working and Tax

Revenue update

Revenue has provided guidance in relation to the tax treatment of e-workers and remote workers. Where certain conditions are satisfied, Revenue will allow an employer to make payments up to €3.20 per day to employees, without deducting PAYE, PRSI, or USC. Amounts in excess of €3.20 paid by the employer should be subjected to tax.

Conditions for relief

  • There is a formal agreement in place between the employer and the employee under which the employee is required to work from home;
  • An employee is required to perform substantive duties of the employment at home; and
  • An employee is required to work for substantial periods at home.

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Payment of Taxi Fares

Revenue update

Where an employer pays for a taxi to transport an employee to or from work due to health and safety concerns, a taxable BIK charge will not apply for the duration of the COVID-19 period only.

Small Benefit Exemption

Up to now, an employer could give employees a small benefit of up to €500 in value, tax free, each year. This benefit must not be in cash. If more than one benefit is given in a year, only the first one qualifies for tax free status. Unused allowance amounts cannot be carried over. 

Revenue update

Where an employer wishes to recognise efforts of front line or other key staff working during the COVID-19 crisis, either by accelerating part of a reward (voucher) usually paid later in the year, or making an additional voucher award, the requirement that only one voucher issues is concessionally waived for the 2020 tax year, where the additional award is related to an employee’s exceptional efforts during the COVID-19 crisis.

This concession only applies to employees who continue to work during the restricted period. All other conditions of the section must be met, for example the maximum (cumulative) value may still not exceed €500, but as stated above, the requirement to only issue one voucher will be waived. Appropriate documentation must be retained by an employer where this concession is availed of.

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Employer Provided Accommodation

Background

The provision by an employer of accommodation to an employee is generally treated as a taxable BIK.

Revenue update

Due to health and safety concerns arising from COVID-19, Revenue will accept that a taxable BIK will not arise where an employer provides temporary accommodation to an employee in the following circumstances:

  • the accommodation made available to an employee by his or her employer is temporary in nature and the reason is to mitigate against the risk of transmission. For example, where an employee returns from an overseas trip and requires self-isolation, or
  • where there is a concern of transmission to other front line staff members/workers residing in the same household.

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If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars employment tax team below:

 

Position

Email

Telephone

Ken Killoran

Tax Partner

kkilloran@mazars.ie

01 449 4451

John Kelly

Tax Director

John.kelly@mazars.ie

01 449 4495