Last year, as part of an international response to COVID-19 recommended by the OECD, the Irish Revenue brought in a range of measures intended to mitigate the adverse employer and individual tax consequences of restrictions on travel.
These measures included the relaxation of PAYE rules in circumstances where people normally employed abroad were required to work in Ireland due to travel restrictions.
However, according to updated guidance, these measures lapsed on December 31, 2020, as explained here.
Foreign Employment and the Operation of PAYE
Under one such concession, the Revenue did not enforce Irish payroll obligations in cases where employees were working abroad for foreign employers but temporarily relocated to Ireland during the COVID-19 period to work for that employer. This concession did not affect the employee's underlying tax liability or the individual's filing obligations.
This concession ceased to apply on December 31, 2020, meaning normal PAYE rules have applied from January 1, 2021.
During the COVID-19 crisis, the Revenue had allowed foreign employers to operate Irish PAYE based on an employee's pre-COVID-19 work pattern in certain circumstances, including where:
- The employee had been working partly in Ireland and partly in a foreign jurisdiction;
- The foreign employer had been applying payroll taxes in Ireland and the foreign jurisdiction based on the employee's pre-COVID-19 work pattern; and
- The employee was unable to return to the foreign jurisdiction as a result of travel restrictions and continued to carry out their employment in Ireland.
This measure also ceased on December 31, 2020, meaning that employers are now required to operate Irish PAYE in the normal way.
PAYE Dispensations and Short-Term Business Travellers
Given the restrictions on travel, the Revenue did not strictly enforce the 30-day notification requirement for PAYE dispensations applicable to short-term business travellers from countries with which Ireland has a double taxation treaty and who are going to spend in excess of 60 workdays in Ireland. This concession expired on December 31, 2020. The normal 30-day notification requirement has applied since January 1, 2021.
PAYE Exclusion Orders and Irish Contracts of Employment
A PAYE Exclusion Order instructs a company to not deduct income tax or Universal Social Charge from the income of an Irish employee working abroad. As a COVID-19-related concession, the Revenue stated that a PAYE Exclusion Order would remain valid if an employee working abroad under an Irish employment contract spent more than 30 days working in Ireland due to the pandemic. This concession ceased to apply from December 31, 2020.
Special Assignee Relief Programme (SARP)
Another notable change relates to employer filing obligations under the SARP scheme.
The SARP provides income tax relief for certain people assigned to work in Ireland from abroad. Under the scheme, 30% of a qualifying employee's salary above €75,000 is disregarded for tax purposes, up to a ceiling of €1m.
Employers generally must file Form SARP 1A with the Revenue for each employee within 90 days of the employee arriving in Ireland to take up their duties. As part of the COVID-19-related administrative concessions, the 90-day deadline was extended by 60 days. However, this concession lapsed on December 31, 2020, meaning that from January 1, 2021, all SARP 1A forms must be filed within 90 days.