Taxation of international executives
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.
Are there special residency considerations for short-term assignments?
Are there special payroll considerations for short-term assignments?
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.
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 21 days of the date the assignee takes up duties in the State.
Of note is a recent update to the Statement of Practice in December 2016, as provided in Revenue’s e-brief 102/16 on 22 December 2016. In summary, the updated Statement of Practice significantly limits the circumstances where Irish payroll withholding exemption (referred to as PAYE Clearance) would be permitted. At the time of writing, KPMG Ireland are clarifying this with Revenue, however currently we are seeing many PAYE Clearance requests being denied by Revenue.
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.
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.
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