Employment Tax Alert - March 2018

In this Employment Tax Alert, we will provide you with an update on employment tax developments that impact employers, organisations in Ireland and those that do business in Ireland.

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March 2018 Tax Newsletter

ET- Tax Update

March 2018 Tax Newsletter

This series of articles will provide you with an update on tax developments that impact organisations in Ireland and those that do business with Ireland.

Liabilities for Failure to Operate the PAYE System Correctly

With effect from 1 January 2018, employers who fail to operate PAYE withholdings on employment income will be liable, on a grossed-up basis, for the PAYE liability that should have been withheld on the employment income. The provision was announced in Finance Act 2017 and it forms part of measures to facilitate the implementation of PAYE Modernisation from 1 January 2019.

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Change In Basis Of Assessment For Employment Income

ET-employment income
In line with measures introduced in Finance Act 2017, with effect from 1 January 2018, an employee will be charged to tax on employment income in the year in which the income is “paid”. Previously, an “earnings” basis applied such that employment income was taxable in the year in which it was earned, notwithstanding that it was paid and subject to PAYE withholdings in a subsequent tax year (e.g. bonus payments).

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Key Employee Engagement Programme (“KEEP”) – March 2018

New Office
In line with expectations, the Minister for Finance announced in his Budget 2018 speech the introduction of a new tax-advantaged share scheme in Ireland known as the “Key Employee Engagement Programme” (KEEP). The scheme was formally enacted through a Ministerial Order on 14 January 2018.

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Approved Retirement Funds

Revenue has updated Chapter 23 of its Pension Manual to provide guidance on the tax treatment of distributions from an Approved Retirement Fund (ARF)/Approved Minimum Retirement Fund (AMRF) from a Qualified Fund Manager (QFM) to a non-resident taxpayer.

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Professional Membership Fees

From the years 2004 to 2010, a specific tax relief allowed an employer to pay/reimburse as tax-free the annual professional membership fees on behalf of employees where the membership was regarded as “relevant” to the business of the employer. This relief was removed from 2011 onwards with the result that professional membership fees paid/reimbursed by an employer will only qualify as tax-free in the hands of an employee under general principles, i.e., where the fees are incurred “wholly, exclusively and necessarily” by the employee in the performance of their duties.

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Private use of company vans

Revenue has updated Part 05-04-04 of its Tax and Duty Manual (“Benefit-in-Kind – Private Use of Company Vans”) to provide information on the BIK exemption for electric vans which commenced on 1 January 2018.

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