Revenue Note for Guidance
This section provides for an additional charge on certain remuneration, such as bonus payments, paid to employees of financial institutions that have received financial support from the State. This additional charge, “excess bank remuneration charge”, is incorporated into the USC and applies in all respects as if it was USC except that it is charged at a higher rate of 45%.
(1) The definitions used in section 531AAD are:
“excess bank remuneration charge” is construed in accordance with subsection (7).
“relevant employee” means an employee of a specified institution who is resident in the State in a year of assessment or whose duties are performed wholly or partly in the State at any time in that year of assessment.
“relevant remuneration” is the remuneration that will be subject to the additional charge and is any salary or benefits that is not regarded as ‘regular’ salary or benefits such as bonus payments.
“regular” is essentially an employee’s normal fixed remuneration package. It is defined in relation to relevant remuneration as salary, fees or benefits that do not vary with the performance of the business of the financial institution, the contribution of the employee to the performance of the business or the performance by the employee of his or her duties.
“specified institution” is a financial institutions in respect of which the Minister for Finance has made an order under the Credit Institutions (Financial Support) Act 2008 enabling financial support to be given and in respect of which financial support was actually given either under that Act or under the National Pensions Reserve Fund Act 2000.
(2) A threshold of €20,000 is used to determine if an employee’s remuneration is to be regarded as relevant remuneration and thus subject to the additional charge. Where an employee has relevant remuneration in a year of assessment that exceeds €20,000, the entire amount, and not just the excess over €20,000, is chargeable. This provision ensures that certain employees whose remuneration may be commission-based are not subject to the additional charge.
(3) The chargeable event i.e. when relevant remuneration is regarded as being awarded in relation to a particular year of assessment, is determined by whether a contractual obligation to make the payment arises in a year of assessment or, in the absence of such a contractual obligation, the payment is made in a year of assessment.
(4) The chargeable amount is determined at the date of payment of the relevant remuneration as either the amount of money, or in the case of something other than money, its money’s worth.
(5) The market value is substituted for the value of relevant remuneration where its market value is higher than that value at the time of award. Market value is the price that an asset might be expected to fetch on a sale in the open market.
(6) Any condition or restriction on relevant remuneration that has the effect of reducing its market value is to be ignored in establishing the chargeable amount.
(7) This charging provision operates by disapplying the normal USC rates (i.e. 2%, 4%, 7% and 10%) in section 531AN in respect of any part of an employee’s aggregate income for a year of assessment that is relevant remuneration. Instead, the relevant remuneration is charged to “excess bank remuneration charge” at a higher rate of 45%.
(8) Section 531AO(2), which obliges employers to deduct and charge USC at specified rates, is disapplied. Instead, an employer is obliged to charge relevant remuneration and deduct “excess bank remuneration charge” at the rate of 45% in the period 6 February 2011 (date of passing of the Finance Act 2011) to 31 December 2011 and in subsequent years of assessment.
(9) “excess bank remuneration charge” is payable for the tax year 2011. Employers may have made awards of relevant remuneration in the period 1 January 2011 to 6 February 2011 (date of passing of the Finance Act 2011) before they were obliged to deduct the charge. In such cases, employers were obliged to provide Revenue with certain information by 30 June 2011 to enable the charge to be collected from the employee. This information included the name and PPS number of any employee to whom relevant remuneration was awarded, the amount of such remuneration and the amount of USC, if any, that was deducted.
(10) For 2019 and subsequent years of assessment, employers are obliged to send an annual return to Revenue by 14 January in the following year containing specified information about awards of relevant remuneration. This information includes the name and PPS number of any employee to whom relevant remuneration was awarded, the amount of such remuneration and the amount of excess bank remuneration charge that has been deducted and remitted in respect of that employee.
Relevant Date: Finance Act 2020