Revenue Note for Guidance

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Revenue Note for Guidance

823 Deduction for income earned outside the State


This section provided relief by way of a deduction against earnings in the case of Irish resident employees who worked overseas during a tax year. It did not, however, extend to civil and public servants, military personnel or employees of any State boards or bodies or to earnings in the UK.

The relief was aimed at those committed to working abroad for significant periods. Thus, to qualify, a person had to work abroad for at least 90 qualifying days in a tax year (67 days in the case of the short tax “year” 2001) or in a 12-month period, if it straddled 2 tax years. Each period of absence had to include a continuous period of at least 11 consecutive days.

The amount of the deduction was related to the time spent on employment abroad. Thus, broadly speaking, a person working abroad for 6 months could, after the deduction, be subject to tax only on half their annual earnings. The relief operated by way of a claim made by the taxpayer after the end of the tax year. The aggregate deduction allowed in respect of any year of assessment could not exceed 31,750.

As a qualifying day could not arise after 31 December 2003, this relief effectively ceased in the tax year 2003.



(1)qualifying day” is one of at least 11 consecutive days on or before 31 December 2003 spent outside the State and which taken as a whole were substantially devoted to the duties of an office or employment abroad. Thus, while it was not necessary to work at weekends or on public holidays spent abroad, other days spent abroad had to be devoted to work. Also, only those days on which a person was absent at the end of the day counted and no day could be counted more than once.

relevant period” is effectively a 12-month period straddling 2 tax years.

the specified amount” in relation to a particular office or employment is the amount of the deduction provided for in the section. This is calculated by taking a fraction of a person’s earnings or earning plus any pension income for a tax year (E in the definition of the specified amount). The fraction is got by placing the number of qualifying days abroad over 365 (270 in the case of the short tax “year” 2001). The earnings base to which the fraction is applied explicitly excludes the following —

  • amounts represented by general benefits-in-kind;
  • the value of the benefit-in-kind in respect of a car;
  • amounts in respect of preferential loans;
  • severance payments;
  • amounts in respect of restrictive covenants;
  • amounts arising from the exercise of share options.

Also, the earnings on which the calculation is to be made must be net of superannuation contributions.


(2) The section applied to all directors and employees in the private sector. It also applied to those employed in the commercial semi-State sector. It did not, however, apply to the civil and public service, military personnel and the like. The relief was also confined to those working overseas other than in the UK. It also did not apply to those charged to tax on a remittance basis (section 71(3)) or to those who benefited from the relief of foreign earnings under the split-year treatment provided for in section 822.

Exception for seafarers

(2A) Seafarers of the type who would qualify for the seafarers allowance (section 472B) are an exception to the general rule that visits to the UK did not count for the purposes of the foreign earnings deduction. Thus, where, in a period of at least 11 consecutive days absence from the State, a seafarer on a sea-going ship visited a port in the UK and also visited a port outside the State and the UK, the time spent in the UK port counted for the purposes of the foreign earnings deduction. Thus, the visit to the UK port could not have been a direct visit from a port in the State. It had to be part of a longer international voyage.


(3) A taxpayer is entitled to a deduction from earnings equivalent to the specified amount where he or she can establish that he or she has spent at least 90 qualifying days in a tax year (67 days in the case of the short tax “year” 2001) or relevant period outside the State performing the duties of an office or employment. The deduction is given on foot of a claim from the taxpayer. Separate calculations of the foreign earnings deduction are necessary where an individual spent time abroad in the exercise of more than one employment in a year. Also, the specified amount or the deduction can never exceed the income from a particular employment. The need for separate calculations in cases of more than one employment in a year does not, however, affect an individual’s right to amalgamate the qualifying days from those employments for the purposes of meeting the 90 (or 67) day rule. The maximum deduction allowed in respect of any year of assessment is 31,750.


An individual spent 50 qualifying days working abroad for Company A early in the tax year 2002. Having changed employment in June of that year, the individual subsequently spent 80 qualifying days working abroad for Company B in the same tax year. Earnings for the year 2002 were as follows —

Salary from Company A: 5,000

Salary from Company B: 35,000

As the number of qualifying days was 130 and thus exceeded 90 for the year, the individual can claim the foreign earnings deduction as follows —

Employment with Company A


× €40,000 = €5,479


Employment with Company B


× €40,000 = €8,767


As the calculation in respect of the employment with Company A results in an amount that exceeds the income from that employment, the deduction is limited to the amount of the income, namely, 5,000.

The total deduction for the year is therefore 13,767.


(4) There is provision to ensure that claims for the relief relate to earnings only and to explicitly exclude the possibility that expenses paid or recouped by claimants might be added to earnings thus inflating the base for the calculation of the deduction.

Relevant Date: Finance Act 2021