Revenue Note for Guidance

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Revenue Note for Guidance

823A Deduction for income earned in certain foreign states

Summary

This section provides for relief from taxation for the years of assessment 2012 to 2022 for individuals who are resident in the State but who spend significant amounts of time working in a ‘relevant state’ (see definitions below).

The relief does not apply to Universal Social Charge and PRSI.

Details

Definitions

(1)(a) “qualifying day” means a day the whole of which is spent in a relevant state for the purpose of the performance of the duties of a relevant office or employment.

For the years 2012 to 2014, a “qualifying day” must be one of at least four consecutive days, spent in a relevant state, substantially devoted to the performance of duties. No day will be counted more than once.

For the years 2015 to 2022, a “qualifying day” must be one of at least three consecutive days, spent in a relevant state, substantially devoted to the performance of duties. No day will be counted more than once. Also, for the years 2015 to 2022, time spent travelling from Ireland to a relevant state or from a relevant state to Ireland or to another relevant state is deemed to be time spent in a relevant state.

“relevant office or employment” means an office or employment part of the duties of which are performed in a relevant state on a qualifying day;

“relevant period”, means, in relation to a year of assessment, a continuous period of 12 months part only of which is in the year of assessment;

“relevant state” means, with effect from 1 January 2012, Brazil, Russia, India, China or South Africa, and, with effect from 1 January 2013 includes Egypt, Algeria, Senegal, Tanzania, Kenya, Nigeria, Ghana and the Democratic Republic of the Congo and, with effect from 1 January 2015, includes Japan, Singapore, Korea, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico and Malaysia, and with effect from 1 January 2017, includes the Republic of Colombia and the Islamic Republic of Pakistan.

“the specified amount” means an amount determined by the formula-

DxE

F

where-

D is the number of qualifying days in a year of assessment in relation to an individual,

Eis the income in the tax year from a relevant office or employment, and includes so much of any gain realised by the exercise, assignment or release of a right obtained by the individual as an office holder or employee in the relevant office or employment, after deducting any contribution or qualifying pension premium but excluding the amount of-

  1. any benefit in kind under general BIK provisions,
  2. any benefit in kind arising by virtue of a car being made available by reason of the employment,
  3. any benefit in respect of a preferential loan,
  4. any gratuitous lump sum termination payments,
  5. any payments under restrictive covenants,

and

F is the total number of days in the tax year that the individual held a relevant office or employment.

(2)(a) The relief applies to all directors and employees in the private sector and to those employed in the commercial semi-State sector but does not apply to those working in the Civil and Public service.

Non qualifying income

(2)(b) The relief is not available in respect of income from an office or employment which is chargeable on the remittance basis or in respect of income to which:

  • section 472D applies (Research and Development credit),
  • section 822 applies (Split year treatment),
  • section 825A applies (Relief for income earned outside the State), or
  • section 825C applies (Special Assignee Relief Programme).

(3) Relief is granted under this section on foot of a claim from a taxpayer who is resident in the State by providing a proportional tax deduction based on the number of qualifying days worked in relevant states. The maximum that can be deducted in any tax year is €35,000.

For the years 2012 to 2014, a claimant must have worked at least 60 qualifying days in a twelve month period, part or all of which is in the tax year to which the claim relates. For the years 2015 to 2016, the qualifying days requirement in a continuous period of 12 months is reduced from 60 to 40. For the years 2017 to 2022 the qualifying days requirement in a continuous period of 12 months is reduced from 40 to 30.

Where an individual has more than one office or employment, the minimum number of qualifying days requirement can include qualifying days from all such offices or employments.

(4) The amount of income, profits or gains arising to the individual from a relevant office or employment does not include amounts in respect of expenses paid or recouped by the claimant.

(5) Where an individual is entitled to relief for tax suffered in a relevant state, the specified amount is reduced by an amount equal to the amount of income on which such tax was paid.

Relevant Date: Finance Act 2021