Revised expense regime for overseas assignments

Revenue has published updated practice rules on the treatment of subsistence amounts paid or reimbursed to employees on foreign assignments.

Where an employee is required to undertake a foreign assignment, Revenue will allow an employer to pay or reimburse, on a tax-free basis, the cost of subsistence in the international location. This can be done either on a vouched receipts basis or through the payment of an allowance to the employee in compliance with prevailing Civil Service subsistence rates for the location. The level of tax-free subsistence amounts payable to the employee depends on the length of the overseas assignment.

In accordance with an e-Brief (no.149/19) published on 1 August 2019, the tax-free regime will now only be available to employees who have been employed in Ireland by that employer for not less than three months before undertaking an overseas assignment. Also, the tax-free regime will not apply to employees who, in the normal course of duties, are posted or transferred from country to country. 

What employers should consider

Employers who pay subsistence amounts to employees on assignments abroad should now consider the tax treatment of such payments in accordance with the new regime. For example, the new regime will likely impact on the amount of subsistence to employees who are hired and immediately assigned abroad to fulfil a business need of their employer. As the overall tax regime on the payment of expenses to assignees on overseas assignment is complex, employers should take measures to ensure that they are obeying the rules.

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

Staff Member

Position

Email

Telephone

Frank Greene

Tax Partner

fgreene@mazars.ie

01 449 6415

Ken Killoran

Tax Director

kkilloran@mazars.ie

01 449 4451

John Kelly

Tax Director

John.kelly@mazars.ie

01 449 4495

September 2019

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