Revenue Note for Guidance

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Revenue Note for Guidance

825B Repayment of tax where earnings not remitted

Summary

This section is designed to give income tax relief to individuals who are not Irish domiciled and who, before they came to the State, were living and working in a country with which Ireland has a double taxation agreement. The relief applies where the individual is sent by his or her foreign employer to work in Ireland for that employer or for an associated company of that employer and continues to be paid from abroad. In order to make a claim under this section for the 2009 tax year, prior to coming to Ireland the individual must have been living and working in a country that was not a party to the European Economic Area agreement but with which Ireland had a double taxation agreement.

The section allows a “relevant employee” of a “relevant employer” to have his/her income tax liability restricted to the liability on the greater of-

  • the amount of “relevant emoluments” earned and remitted to the State, or
  • €100,000 plus 50% of the “relevant emoluments” over €100,000.

This section applies for the tax years 2009 to 2012. However certain individuals can continue to claim relief up to the 2015 tax year (see below).

Details

Definitions

(1) “associated company”, in relation to a relevant employer, means a company which is that employers associated company within the meaning of section 432 and which is incorporated and resident in a country or jurisdiction with which the State has a double taxation agreement.

For claims made relating to the 2009 tax year the associated company must have been resident in a country or jurisdiction which was not a party to the European Economic Area Agreement but with which the State had a double taxation agreement.

“EEA agreement” means the Agreement of the European Economic Area signed in Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993.

“emoluments” means anything assessable to income tax under Schedule E.

“relevant emoluments” means emoluments paid by a relevant employer (or an associated company of a relevant employer) to a relevant employee, the full amount of which are chargeable to income tax under Schedule E and have been subject to PAYE.

“relevant employee” means an individual who, for a tax year-

  • is resident in the State for tax purposes, and
  • is not domiciled in the State,

and who, prior to becoming resident in the State for tax purposes-

  • was a resident of, and resident in, a country or jurisdiction with which the State has a double taxation agreement (for claims relating to the 2009 tax year the employee must have resided in a country or jurisdiction that was not a party to the European Economic Area agreement),
  • was employed in that country or jurisdiction by the relevant employer or an associated company of the relevant employer who transferred/seconded the individual to Ireland for a period of at least one year (or in the case of claims relating to the 2009 tax year, for a period of at least three years), and the individual continues to be paid from abroad, and
  • had exercised the greater part of his or her employment in that country or jurisdiction.

“relevant employer” means a company that is incorporated and resident in a country or jurisdiction with which the State has a double taxation agreement.

For claims relating to the 2009 tax year “relevant employer” means a company that is incorporated and resident in a country or jurisdiction that is not a party to the European Economic Area agreement but with which the State has a double taxation agreement.

“Revenue officer” means an officer of the Revenue Commissioners.

“tax year” means year of assessment.

(1A) This subsection amends the definition of “associated company”, “relevant employee” and “relevant employer” as outlined above. It also states that with effect from 1 January 2010 the section applies to non-domiciled individuals who, on or after 1 January 2010, become resident in the State for tax purposes for the first time, and who exercise the duties of their employment in the State for the first time.

(1B) This section does not apply from the 2012 tax year and subsequent years except in the limited circumstances set out in subsection (1C).

(1C) Notwithstanding that this section does not apply for the year 2012 onwards, relief will continue to be available to those who had an entitlement to relief in the years 2009 to 2011 as follows:

  • If an individual was first entitled to relief under this section for the 2009 tax year, s/he shall continue to be entitled to relief for the 2012 and 2013 tax years subject to all other conditions being satisfied.
  • If an individual was first entitled to relief under this section for the 2010 tax year, s/he shall continue to be entitled to relief for the 2012, 2013 and 2014 tax years subject to all other conditions being satisfied.
  • If an individual was first entitled to relief under this section for the 2011 tax year, s/he shall continue to be entitled to relief for the 2012, 2013, 2014 and 2015 tax years subject to all other conditions being satisfied.

(1D) Where an individual makes a claim for relief under this section, no relief will be given under the following sections:

  • Foreign Earnings Deduction (section 823A),
  • Special Assignee Relief Programme (SARP) (section 825C),
  • Research and Development relief (section 472D).

(2) This section applies for the tax year 2009 and subsequent tax years, to individuals sent by their foreign employer to work in the State for that employer or for an associated company of that employer and who continue to be paid from abroad.

Where an individual becomes resident in Ireland for tax purposes and exercises the duties of their relevant employment in this State for a period of at least one year (or in the case of individuals who become resident in the State in the 2009 tax year, exercise their relevant employment in the State for a period of three years), then provided the individual continues to be paid from abroad, s/he can, after the end of the tax year, apply to have the tax on the income from the foreign employment reduced to the greater of the tax due on either-

  1. €100,000 plus 50% of the income of the employment over that amount, or
  2. the income from that employment remitted to the State (any tax deducted and not repaid by the employer via the PAYE system will be deemed to be a remittance).

The provisions will only apply if the appropriate tax under the PAYE system has first been deducted and remitted in respect of the income of the foreign employment.

(3) The anti-avoidance provisions of section 72 apply to this section.

(4) Any tax deducted by the employer via the PAYE system will be deemed to be a remittance.

(5)(a) Where an individual makes a claim for repayment of tax under this section, and subsequently remits additional amounts of “relevant emoluments” to the State, s/he will be deemed to be liable to the tax on the emoluments from the date the tax was originally deducted from them under the PAYE system. In practice, the year of claim is readjusted to recoup any tax overpaid and the due date can be taken to be the date on which repayment was originally made.

(5)(b) An additional assessment may be made not later than 4 years from the end of the tax year in which the emoluments were remitted.

(6) Where an individual makes a claim under this section and receives a repayment but fails to remain in the State for the required period of one year (or for individuals who first became resident in 2009, three years) then the individual will be required to repay the tax that was refunded to him/her.

(7) A Revenue officer may refuse a claim if s/he is not satisfied with the information provided.

Relevant Date: Finance Act 2021