Taxation of international executives
Tax returns and compliance
Termination of residence
Economic employer approach
Types of taxable compensation
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
Tax reimbursement methods
Relief for foreign taxes
General tax credits
Sample tax calculation
All income tax information is summarized by KPMG, the Irish member firm of KPMG International, based on the revenue commissioners of Ireland.
When are tax returns due? That is, what is the tax return due date?
31 October following the year of assessment. This can be extended to mid November where the individual is filing and paying their tax liability online.
What is the tax year-end?
What are the compliance requirements for tax returns in Ireland?
Every self-assessed individual is liable to pay Irish income tax or capital gains tax for any tax year-ending 31 December and is required to make a return of income and/or chargeable capital gains to the Irish Revenue no later than the 31 October following the relevant tax year.
Individuals who have no income or gains other than employment income subject to withholding Pay-As-You-Earn (PAYE) are generally not required to submit a tax return.
For the 2017 tax year, a tax return is due to be filed no later than 31 October 2018. Extension to the filing and payment date may be available where the individual uses the Revenue Online Service (ROS) web site of the Irish Revenue to both submit his/her tax return and make electronic tax payments from a designated bank account. Individuals who do not use the facility are subject to the main filing deadline indicated (31 October). Failure to file a tax return within two months of the relevant filing date results in an automatic penalty equal to 5 percent of the income tax and/or capital gains tax liability due before deduction of any preliminary tax paid for the tax year. The late filing penalty increases to 10 percent thereafter.
Individuals subject to tax under the self-assessment system are required to make a balance of income tax payment by 31 October following the end of tax year together with an estimated preliminary (income) tax payment for the current tax year. For 2017, a preliminary income tax payment is due no later than 31 October 2017 and the 2017 balance of tax is payable by 31 October 2018. The required limits for the preliminary income tax payments are as follows:
Capital gains tax for disposals made during the period 1 January to 30 November is due by 15 December of that tax year. Capital gains tax on disposals of assets during the period 1 December to 31 December must be paid by 31 January following the end of the relevant tax year. The relevant transactions are also reportable on the annual tax return relating to the year of disposal.
Failure to make tax payments on time, or within the required limits, results in interest penalties effective from the due date for payment.
Generally if an individual (other than a director of an Irish company) does not have income that is taxed otherwise than under the PAYE system, there is no requirement to file a tax return unless he/she has chargeable capital gains during the tax year. Generally, all Irish company directors must make returns even if taxed only under the PAYE system.
Non-residents are liable to Irish tax on Irish-source income only (subject to DTA relief).
What are the current income tax rates for residents and non-residents in Ireland?
Income tax table for 2017
Personal income tax rates
|At 20% first||At 40%|
|Married couple/ civil partnership (one income)||€42,800||Balance|
|Married couple/ civil partnership (two incomes)*||€67,600||Balance|
|One parent/ widowed parent/ surviving civil partner||€37,800||Balance|
*€42,800 with an increase of €24,800 maximum
Personal tax credits
|Married couple/ civil partnership||€3,300|
|Single person child carer credit||€1,650|
|Additional credit for certain widowed persons/ surviving civil partner||€1,650|
|Earned income credit (increased)*||€950|
|Home carer credit (increased)||€1,100|
|Rent credit – single and under 55 years (reduced)**||€40|
*Applies to self employed income and certain PAYE employments not subject to the PAYE credit
**Rent credit will no longer apply from 2018 onwards
PRSI contribution, Universal Social Charge
|8.50%||If income is €376 p/w or less|
|Employee** (class A1)|
|Universal Social Charge||0.5%||€0 to €12,012**|
|2.5%||€12,013 to €18,772***|
|5.0%||€18,773 to €70,044****|
*Employees earning €352 or less p/w are exempt from PRSI. In any week in which an employee is subject to full-rate PRSI, all earnings are subject to PRSI. Unearned income for employees in excess of €3,174 p.a. is subject to PRSI. Sliding scale PRSI credit of max. €12 per week where weekly income between €352 and €424.
** Individuals with total income up to €13,000 are not subject to the Universal Social Charge.
*** Increase in upper limit of the 2.5% band from €18,668 to €18,772 since 2016.
**** Reduced rate (2.5%) applies for persons over 70 and/or with a full medical card, where the individual’s income does not exceed €60,000.
Self- employed PRSI contribution, Universal Social Charge
|Universal Social Charge||0.5%||€0 to €12,012**|
|2.5%||€12,013 to €18,772***|
|5.0%||€18,773 to €70,044****|
|8%||€70,045 to €100,000|
*Minimum annual PRSI contribution is €500
** Individuals with total income up to €13,000 are not subject to the Universal Social Charge
*** Increase in the upper limit of the 2.5% band from €18,668 to €18,772 from 2016.
**** Reduced rate (2.5%) applies for persons over 70 and/or with a full medical card, where the individual’s income does not exceed €60,000
Income tax table for 2017
|Taxable income bracket (single person)||Total tax on
|Tax rate on
|From EUR||To EUR||EUR||Percent|
The Universal Social Charge (USC), which came into effect on 1 January 2011, is a levy payable on gross income, including notional pay, before any relief for any capital allowances, losses or pension contributions.
All individuals are liable to pay the universal social charge if their gross income exceeds the threshold of EUR13,000. In the case of individuals aged 70 or over, and individuals who hold full medical cards, the 3 percent (2016) or 2.5% (2017) rate applies to all income over EUR13,000. This reduced rate however is only available for those whose gross income is less than EUR60,000 per annum.
The USC is essentially another form of income tax and is usually regarded as
an admissible tax for the purposes of Ireland’s Double Taxation Agreements.
|Per year||Rate of universal social charge||Per Year||Rate of universal social charge|
|Up to EUR12,012||1||Up to EUR12,012||0.5%|
|Between EUR12,013 and EUR18,668||3||Between EUR12,013 and EUR18,772||2.5%|
|Between EUR18,669 and EUR70,044||5||Between EUR18,723 and EUR70,044
|Between EUR70,045 and EUR100,000||8||Between EUR70,045 and EUR100,000||8%|
There is a surcharge of 3 percent on individuals who have income from self-employment that exceeds EUR100,000 in a year regardless of age.
For the purposes of taxation, how is an individual defined as a resident of Ireland?
Residence is based solely on physical presence in Ireland. Residency is acquired in respect of a tax year where an individual spends either of the following:
Under the aggregation test, the individual is regarded as resident for the second tax year. An individual is considered present in Ireland if they spent any part of that day in Ireland.
Ordinary residence begins once an individual has been resident in Ireland for three consecutive tax years. Similarly, it ceases at the end of the third consecutive year in which an individual is not resident.
Irish Individuals who are no longer resident but who retain ordinary residence and are Irish domiciled are taxable on worldwide income subject to certain exclusions. Excluded income includes; income from an employment, trade, or profession the duties of which are exercised wholly abroad and foreign investment income not exceeding EUR3,810 during a tax year. Where annual foreign income exceeds EUR3,810, the total amount of such income remains taxable in Ireland subject to relief under a tax treaty.
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
No. There is no di-minimus for residency purposes. However, a 30 day di-minimus is applied where individuals who are employed abroad come to perform duties of their employment in Ireland.
What if the assignee enters the country before their assignment begins?
Each case should be considered on its own merits.
Are there any tax compliance requirements when leaving Ireland?
There are no special procedures on the termination of residence.
What if the assignee comes back for a trip after residency has terminated?
Each case should be considered on its own merits.
Do the immigration authorities in Ireland provide information to the local taxation authorities regarding when a person enters or leaves Ireland?
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
Each case should be considered on its own merits. In general, a tax return will be required if the assignee has Irish-source income.
Do the taxation authorities in Ireland adopt the economic employer approach1 to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Ireland considering the adoption of this interpretation of economic employer in the future?
Traditionally no, but Revenue issued guidance at the end of 2016 which suggests that they are starting to apply the economic employer concept. The position is currently unclear so advice should be sought.
Are there a de minimus number of days2 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
What categories are subject to income tax in general situations?
All benefits, whether in-cash or in-kind, arising from an employment form part of taxable income, subject to certain exceptions. The following are examples of remuneration that would be included as income for tax purposes:
Are there any areas of income that are exempt from taxation in Ireland? If so, please provide a general definition of these areas.
The following items are not subject to tax:
With effect from 1 January 2007, the Revenue commissioners are prepared to accept that tax free subsistence that relates to the provision of accommodation and utility charges may be paid or reimbursed for the first 12 months of a temporary assignment provided that the period of assignment in Ireland does not exceed 24 months.
Are there any concessions made for expatriates in Ireland?
A Special Assignee Relief Programme (SARP) was introduced in 2012 which applied to individuals arriving in Ireland during 2012, 2013 or 2014. It was announced in Finance Act 2014 that the regime has been extended to 2017, and in Finance Act 2017 it was extended for another 3 years, to end on 31 December 2020. The relief operates on the basis of providing a tax free deduction from remuneration based on a formula as follows:
(A-B) X 30%
Where A is the total remuneration of the employee (with a cap of up to EUR500,000 in the case of an employee who came to Ireland in the years 2012 to 2014) and B is EUR75,000. This remuneration cap of €500,000 has been removed for 2015 onwards.
The following conditions must be met.
Relief is also available to these individuals who perform duties outside of Ireland as part of their assignment. In the case of employees who arrived in Ireland in the years 2012 to 2014, substantially all of the employee’s duties must be performed in Ireland for at least 12 consecutive months.
The relief will apply for the first five years of the individual’s residency in Ireland.
In 2012 a Foreign Earnings Deduction (FED) for employees who travel to develop markets in BRICS countries namely Brazil, Russia, India, China and South Africa.
It was provided in Finance Act 2014 that the FED tax relief will be extended until 2017, and in Finance Act 2017 it was extended until 31 December 2020.
With effect from 1 January 2013, the number of countries was extended to include Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania.
Finance Act 2014 extended the number of qualifying countries to include Japan, South Korea, Singapore, the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Malaysia and Mexico.
Finance Act 2017 extended the qualifying countries to include Colombia and Pakistan.
The deduction will apply to an Irish resident individual who has 30 qualifying days working outside Ireland in any of the qualifying countries in a continuous 12 month period. Prior to 1 January 2017, 40 days were required and prior to 1 January 2015, 60 qualifying days were required.
A qualifying day is one of at least 3 consecutive days throughout the whole of which the individual is performing the duties of his employment in any of these countries. Days of travel, between Ireland and the qualifying country, can be included as qualifying days. This was a new provision under Finance Act 2014.
The FED is calculated based on the following formula:
An expatriate who is resident in Ireland but not domiciled is not liable to Irish tax on income from a foreign employment performed outside of Ireland, unless it is remitted into Ireland.
The remittance basis also extends to foreign investment income/capital gains in the case of non domiciled individuals.
Is salary earned from working abroad taxed in Ireland? If so, how?
Please see previous discussion, as remittance basis may apply, where an individual is resident, non domiciled and working under a non Irish employment contract.
Are investment income and capital gains taxed in Ireland? If so, how?
Rents derived from an Irish property are liable for Irish taxes regardless of the residency position of the recipient. For resident and domiciled individuals, rents from worldwide properties are subject to Irish taxes (subject to certain exemptions). Individuals’ resident but not domiciled in Ireland will be taxed on Irish rental income in full, and rents derived from other foreign properties if remitted to Ireland.
When calculating assessable rental income, most expenses incurred in renting the property are deductible. Such expenses would include agents’ fees, advertising costs, repairs etc. If the property is furnished, either an annual wear and tear allowance of EUR254 or an allowance equal to 12.5 percent of the total cost of the fixture and fittings, whichever is the higher, is available for eight years starting from the year in which the cost is incurred. A deduction is available against gross rents for mortgage interest paid on borrowings for the purchase, improvement or repair of a rental property. A claim for mortgage interest has been reduced to 75 percent from 8 April 2009. This measure applies to both new and existing mortgages.
The entitlement to a reduction for mortgage interest paid against rental income is also conditional on compliance with the registration requirements of the Residential Tenancies Act 2004.
The Private Residential Tenancy Board (PRTB) was established to operate a national tenancy registration system, to provide information and policy advice on the private rented sector. Landlords are now required to register details of all of their tenancies within one month of the commencement of the tenancy. The tenancy must be registered with the PRTB and the appropriate registration fee paid. A form PRTB1 should be completed and submitted to the PRTB in this regard. In certain instances, Irish residents can claim an exemption of up to EUR12.000 on rental income received from a room, which is made available as rented residential accommodation in a principal private residence. [This income threshold was increased from EUR10,000 in the Finance Act 2014]. Where annual rental income exceeds this amount all rental income received during the tax year is taxable subject to the deductions available as outlined. Certain conditions need to be satisfied in order to exclude this type of rental income from Irish tax; namely, the occupation of the property by the taxpayer wholly as his/her sole residence throughout the tax year. This exemption is therefore not available to individuals on assignment from Ireland during a tax year. The exemption is also not available where the rent is paid to an employee/office holder of the person making the payment.
Dividends and interest income are taxable as part of total income. Individuals’ resident but not domiciled in Ireland and in receipt of investment income from sources outside Ireland will only be taxable to the extent that the income is remitted into Ireland.
Dividends from Irish resident companies carry a tax credit in the form of dividend withholding tax, which is included in total income but is deductible from income tax payable. Double taxation relief is available in respect of foreign withholding tax on foreign (non-U.K.) dividends received under a relevant tax treaty. In the case of a non-domiciled individual, no credit is available for foreign dividend withholding tax unless the dividend is remitted into Ireland. Interest paid by Irish banks, building societies, and similar financial institutions (including Irish branches of foreign banks) are subject to Deposit Interest Retention Tax (DIRT) (41 percent for 2016). No additional income tax is payable on the interest regardless of the individuals marginal tax rate but Universal Social Charges may be payable. A non-resident person is entitled to exemption from this withholding tax if the appropriate non-resident’s declaration is made to the bank or other financial institution.
Individuals are liable to capital gains tax on chargeable gains, that is, capital gains as computed in accordance with the rules prescribed in the Irish Capital Gains Tax Acts. An individual, resident and domiciled in Ireland, is liable to capital gains tax on worldwide chargeable gains. An individual, who is resident but not domiciled in Ireland, is liable on chargeable gains from Irish situated assets, but not on chargeable gains from other assets if the proceeds of the disposal are not remitted into Ireland.
Non-resident and non-ordinarily resident individuals are liable on chargeable gains from the disposal of certain Irish specified assets, but not on the disposal of any assets situated outside Ireland. The main assets on which a non-resident is liable are Irish land, buildings and interests in such land (such as a leasehold interest or mineral rights).
Certain specified assets are exempted so that capital gains from their disposal are not chargeable gains. Exempted assets include an individual’s principal private residence (but not a second home), Irish government securities, most life assurance policies, tangible movable assets with a predictable life of less than 50 years (such as a racehorse).
In the case of a gain on the disposal of a principal private residence carrying development value (sale value in excess of current use value), the exemption does not apply to the part of the gain attributable to the increase in the development value since the date of acquisition.
Chargeable gains are calculated after making an indexation adjustment to the base cost to allow fully for inflation between the year of acquisition and the year of sale. However, in the case of gain on the disposal of Irish situated land or buildings carrying development value, only the current use value at the date of acquisition is indexed. Indexation (relief for inflation) does not apply after 31 December 2002. Any individual liable to capital gains tax is exempted from the first EUR1,270 of chargeable gains in each tax year. There is no transfer of any unutilized allowance between married couples.
The rate of capital gains tax is 33 percent except for gains arising from the sale of certain foreign life assurance policies and units from offshore funds not based in either the EEA or in an OECD country with which Ireland has a double tax agreement.
In general, deposit interest received from Irish or EU lending institutions is liable to Irish income tax at 39 percent with effect from 1 January 2017.
A relief from DIRT on savings used by first time house buyers towards the deposit on a home was introduced in Finance Act 2014. The relief is available on amounts up to 20% of the purchase price and applies to interest earned in a period up to 48 months ending on the date of purchase.
This scheme runs from 14 October 2014 to the end of 2017.
Withholding tax at the standard rate (i.e. 20%) applies to distributions made by an Irish resident company.
|Residency status||Taxable at:|
|Other (if applicable)||N/A||N/A||N/A|
A gain arising on a foreign exchange transaction can be regarded as a chargeable gain for Irish Capital Gains Tax purposes.
A gain accruing to an individual on the disposal of a his/her private residence and grounds up to one acre which has been occupied by the individual throughout the period of ownership as his/her only or main residence is exempt from Irish capital gains tax.
Partial relief is available on gains on the disposal of a property which was an individual’s principle residence for part of the period of ownership only. In addition, certain periods of absence may be regarded as periods of occupation for the purposes of calculating the relief such as, the last 12 months of ownership, periods of foreign employment if the individual occupies the residence both before and after the periods.
Chargeable gains for a year of assessment are aggregated with allowable losses for the year in computing the net amount assessable to capital gains. Losses may also be brought forward from previous years. Allowable losses which remain unrelieved may be carried forward indefinitely.
Depends on the nature of the item.
Assets acquired by inheritance or gift are deemed to have been acquired at market value at the date of the death or gift.
Are there additional capital gains tax (CGT) issues in Ireland? If so, please discuss?
Anti-avoidance legislation has been introduced in respect of temporary non-residents who dispose of certain assets during a tax year of non-residence for the purpose of avoiding Irish capital gains tax. It applies with respect to the 2003 tax year onwards.
For the restriction to apply, an individual must beneficially own "relevant assets" on the 31 December of the tax year of departure. These are defined as shares in a company or a right to acquire shares or other rights in a company. The market value of the relevant assets on this date must be equal to or exceed either 5 percent of the value of the issued share capital of the company or EUR500,000 for the restriction to apply.
Where an individual leaves Ireland and during a period of non-residence sells relevant assets but returns to Ireland within six tax years of departure, the individual is deemed to have disposed of and immediately reacquired the relevant assets as at the 31 December of the tax year of departure at the market value on that date. Any chargeable gain accruing must be included in the tax return applicable for the year of return.
This legislation will not apply where, as a resident of Ireland, the individual would not have been assessable to Irish capital gains tax in respect of gains on a disposal of relevant assets.
Are there capital gains tax exceptions in Ireland? If so, please discuss?
An annual self assessed Local Property Tax (LPT) charged on the market value of all residential properties in Ireland (whether rented or occupied) is now in force in Ireland. A half year charge applied in 2013 with a full year charge applying in 2014 and thereafter. The LPT charge for a property is based on the market value on the “valuation date”. The charge ranges from €90 per annum (for properties valued under €100,000 on the valuation date) to €3,050 for properties values at €1.5m or more on the valuation date.
For 2013, the valuation date was 1 May 2013. For 2014, the “valuation date” was 1 November 2013.
The amount of LPT due for 2017 depends on the value declared for the property on 1 May 2013 and also the LPT rate applying to your property for 2017.
In order to be within the charge to LPT for 2017, an individual must own (co-own or have an interest in) the property on 1 November 2016. Individuals who have sold their residential property after 1 November 2016 will be liable to pay LPT on the property for 2017, even if it was sold before the end of 2017.
Payment of the tax can be made via the payroll system on a monthly basis or via direct debit or once off payments directly to the Irish Revenue.
What are the general deductions from income allowed in Ireland?
The only deductions allowed in computing income from an employment are in respect of expenses incurred by the employee wholly, necessarily and exclusively in the performance of the duties of the employment. In practice it is very difficult to obtain a deduction on this basis. In any case, it is usual for the employer to reimburse such expenses directly to the employee.
Most allowances are now granted by way of a tax credit.
|2017 tax credits||EUR|
|Widowed (no children)||1,650|
The home carers’ credits is claimable by married persons who are jointly assessed and where one spouse works at home to care for children, the aged or incapacitated persons. The carer spouse’s income is not in excess of EUR7,200. A reduced tax credit applies where the income is between EUR7,200and EUR9,200.
The credit and the increased standard rate band for certain two earner couples are mutually exclusive but a person may opt for whichever is the more beneficial.
The employee PAYE credit is only available to Irish employment income or other EU employment income, which is subject to a similar system of wage withholding.
A deduction is available for alimony made pursuant to a court order. Such payments constitute taxable income (from which the payer deducts tax at the standard rate) of the recipient. No deductions are available for maintenance paid in respect of child support.
In general, a deduction from total income is given for interest paid on any loan used to purchase, repair, develop, or improve an individual’s principal private residence.
What are the tax reimbursement methods generally used by employers in Ireland?
Current year gross-up is the normal method of recognizing tax reimbursements paid by the employer.
How are estimates/prepayments/withholding of tax handled in Ireland? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Each individual, other than one whose income is fully taxed under the Pay-As-You-Earn (PAYE) system, is required to make a prepayment, known as preliminary tax. In order to avoid interest, the amount of preliminary tax paid must be of an amount at least equal to the lesser of the following:
In determining the preliminary tax payment under each of these tests, the relevant percentage is applied to the aggregate of the individual’s liabilities to income tax, PRSI and USC. However, any of these taxes or levies that have been withheld by an employer under the PAYE system is credited before applying the relevant percentage.
In practice, the Irish Inspector of Taxes may issue a notice stating the amount of preliminary tax that the inspector thinks is likely to be due based on the previous year’s tax return. The amount in the Inspector’s notice becomes payable on the preliminary tax due date unless the individual displaces the inspector’s figure by paying his/her own estimate before that date. The individual is not required to make any preliminary tax payment for a year if his/her liability to Irish tax (excluding tax under PAYE) for the preceding year was zero. For example, an expatriate starting to work in Ireland has no preliminary tax to pay in the first tax year in which he/she is a resident. However, such a person has the normal obligation to make a tax return and pay his/her tax liability after the end of that year.
Calculated on monthly cash remuneration and benefits-in-kind.
Generally, paid monthly.
When are estimates/prepayments/withholding of tax due in Ireland? For example, monthly, annually, both, and so on.
Is there any Relief for Foreign Taxes in Ireland? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Normally, relief for foreign income tax suffered on any income is granted as a credit against the Irish income tax on the same income. A credit is only available under the following circumstances:
Ireland has currently 72 tax treaties (of which 70 are in effect) with most major countries.
An individual resident but not domiciled in Ireland is not allowed a credit for foreign tax to the extent that it is attributed pro rata to foreign income not remitted into Ireland.
The only form of unilateral relief from double taxation given is by deducting the foreign tax from the relevant foreign income. Unilateral relief is given for foreign tax suffered on income not covered by a tax treaty and may, if the taxpayer elects, be taken instead of a tax credit available under a tax treaty.
Similarly, relief for any foreign tax suffered on any chargeable capital gain is given against Irish capital gains tax on the same chargeable gain, but only where permitted under a tax treaty. If not so permitted, unilateral relief is available in calculating the chargeable gain in the form of a deduction of the foreign tax.
What are the general tax credits that may be claimed in Ireland? Please see list below.
This calculation3 assumes a married taxpayer resident in Ireland with two children whose three year assignment begins 1 January 2014 and ends 31 December 2017. The taxpayer’s base salary is USD100,000 and the calculation covers three years.
|Moving expense reimbursement||20,000||0||10,000||0|
|Interest income from non-local sources||6,000||6,000||6,000||6,000|
Exchange rate used for calculation: USD1.00 = EUR0.7530.
Calculation of taxable income
|Days in Ireland during year||365||365||365||365|
|Earned income subject to income tax|
|Net housing allowance||9,036||9,036||9,036||9,036|
|Moving expense reimbursement||0||0||0||0|
|Interest income from non-local sources**||0||0||0||0|
|Total taxable income||111,903||108,138||104,373||104,373|
Calculation of tax liability
|Taxable income as above||111,903||108,138||104,373||104,373|
|Irish tax thereon||0||0||0||0|
|Domestic tax rebates (dependent spouse rebate)||0||0||0||0|
|Foreign tax credits||0||0||0||0|
|Total Irish tax||32,152||29,745
* It is assumed that the home leave amount is exclusive of one home leave trip per year and therefore not taxable.
** It is assumed that the other income represents non-Irish income which has not been remitted to Ireland and therefore not taxable.
It is assumed that an A1/Certificate of Coverage has been obtained; therefore Irish social security contribution has not been included in any calculations.
1Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee’s salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.
3Sample calculation prepared by KPMG, the Irish member firm of KPMG International, based on the revenue commissioners of Ireland.
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