Benefits in Kind
Taxable benefits include certain benefits in kind and other benefits made available by the employer to the employee. There are special rules for calculating various types of benefit. Payments which are the reimbursement of expenses incurred wholly, exclusively and necessarily in the performance of the duties of the employment, are not taxable. However as in the United Kingdom, what qualifies is relatively narrow.
The employer is obliged to calculate income tax, pay related social insurance (PRSI) and universal social charge (USC) and to calculate, deduct and pay to Revenue tax on behalf of the employee in relation to the employment income and other benefits.
Revenue issue a statement of tax credits an standard rate band cut off point, pending which the employer must proceed on the basis of a default position. In some circumstances the employer may be directed to withhold and pay local property tax to the Revenue Commissioners on behalf of the employee.
Specific reimbursement of travel and removal and relocation expenses, including expenses of moving household and personal effects and living expenses for a temporary period are exempt from income tax.The nature of the expenses must be proved Prior approval is not required.
Subsistence expenses paid to temporary assignees for a period may be exempt from Irish income tax. Tax-free accommodation and certain other utilities may be paid for the first 12 months of an assignment if the total period of assignment does not exceed two years. Conditions apply.
Classes of Benefit
Pension contributions and share schemes may be made available in accordance with approved pension schemes and share option incentive schemes, with terms and conditions which provide for favourable tax treatment and without the obligation to deduct tax.
Non-cash benefits may relate to such things as a car or use of a car, accommodation, share options, low interest rate loans and assurance plans. There are special methods of calculating the value of certain benefits including in particular preferential loans, cars, vans, accommodation and other benefits.Generally, in relation to other taxable benefits, the employer must value them and pay tax by deduction on behalf of the employee under the PAYE system.
Irish income tax may apply to gains pursuant to share options with reference to part of the gains made during periods of residence in Ireland. The employer is obliged to deduct tax under the PAYE system.