Revenue Note for Guidance

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Revenue Note for Guidance

118B Revenue Approved Salary Sacrifice Agreements


This section copper-fastens the existing administrative salary sacrifice arrangements which have already been authorised by the Revenue Commissioners in relation to the operation of the “Travel Pass” Schemes approved under section 118(5A), and salary sacrifices which are associated with the approved profit-sharing schemes set up by employers under section 510. The section puts beyond doubt the issue that such salary sacrifices are Revenue approved arrangements.


(1) Subsection (1) contains the relevant definitions necessary for this section.

(2)(a) Salary sacrifice arrangements are only approved in relation to–

  • the operation of the travel pass schemes with approved transport providers (section 118(5A)),
  • approved profit-sharing schemes established under section 510, and
  • the provision of bicycles/safety equipment by employers to directors and employees (section 118(5G)).

(2)(b) Any other benefits arising as a result of any salary sacrifice arrangement, and not specifically approved by Revenue as being exempt, are deemed to be payment of emoluments by an employer and chargeable to tax.

(3) Where the exempt employee benefit is provided to a spouse, civil partner or connected person, rather than the employee, it will not be treated as an exempt benefit, but deemed to be payment of emoluments by an employer and will be taxed accordingly.

(4) Where an employee, as part of an arrangement, is provided with an exempt employee benefit and a compensating payment, this will be treated as an avoidance scheme. In such circumstances the exemption status conferred by subsection (2)(a) will not apply and the income subjected to salary sacrifice will be deemed to be payment of emoluments by an employer and taxed in full.

(5) Where income is not paid during the year e.g. a bonus, commission or other income which only arises after the end of the year, such income cannot be taken into account for the purposes of salary sacrifice.

Relevant Date: Finance Act 2021