What Is Permanent Establishment?
The Irish Revenue* defines permanent establishment as “a fixed place of business through which the business of an enterprise is wholly or partly carried on” and includes it as an article in double taxation treaties which follow the Organisation for Economic Co-operation and Development (OECD) model tax treaty.
As the text of individual double taxation treaties can vary, the relevant article of the appropriate treaty should always be consulted when making a permanent establishment determination.
What Are The Consequences Of Permanent Establishment?
If an enterprise from outside of Ireland is deemed to have permanent establishment in the state, then Irish Revenue has the right to tax the profits of that enterprise.
The taxes which can apply, depending on the circumstances, are:
- Income Tax;
- Corporation Tax; and
- Capital Gains Tax.
Do I Have Permanent Establishment?
Determining permanent establishment is not always straightforward, although article 5 of the OECD model lists the following as indicators of permanent establishment:
- A place of management;
- A branch;
- An office;
- A factory;
- A workshop; and
- A mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
This list is not exhaustive, and even without a physical presence such as those listed above, it is still possible for a business to have permanent establishment, particularly when the business has an agent in Ireland acting on its behalf to conclude contracts.
How EisnerAmper Ireland Can Help
To make a definitive determination we would recommend consulting EAI’s specialist Corporate Tax team for expert advice.
*Article 5 of Revenue’s Commentary on Irish tax treatiesLatest News →
Employee Relocation Tax Relief – Moving to Ireland
Removal and Relocation Expenses Overview for Employers
Workforce Global Mobility is an increasingly common consideration for businesses that operate in multiple jurisdictions and can result in significant increases to staffing costs, over and above the standard payroll and employment tax considerations. Hiring staff from overseas is also increasingly common, which can create challenges for the employer. Covering the costs associated with relocation is standard practice when transferring employees to Ireland. However, there are various tax implications that must be taken into account at the planning stage to minimise potential liabilities.
Revenue’s Tax and Duty Manual Part 05-02-03, Removal and Relocation Expenses, notes:
"The taxation of certain removal and relocation expenses should be relaxed in genuine cases of employees having to incur expenses to move to a new employment location, where the payment made by the employer towards the expenses results in no net overall benefit to the employee." Source: revenue.ie.
Tax-Free Employee Subsistence Expenses
As is the case with all expense reimbursements, Revenue require payments to be matched with receipted expenditure, with the exception of temporary subsistence allowances. Employers are permitted to pay a temporary subsistence allowance to employees while they are looking for accommodation in their new location. The amount allowable is based on 10 nights at the Civil Service Rates (up to €147 per night).
It is important to note that the amount reimbursed cannot be greater than the cost borne by the employee.
Employee Relocation Tax Relief Conditions
According to Revenue, the following are the conditions that must be satisfied to allow removal and relocation expenses to be paid tax-free:
- there are actual removal and relocation expenses; - the expenses are for a reasonable amount; - the payment of the expenses is properly controlled; and - moving house is necessary. Source: revenue.ie.
What Relocation Expenses Can Be Claimed Back?
There is no definitive list of the expenses which can be claimed back tax-free, so it is the responsibility of the employer to ensure that any payments meet the prescribed conditions, however, some of the more common items include:
- Costs associated with moving house, such as auctioneer’s fees, solicitor’s fees & stamp duty; and
- Costs associated with movement of furniture, including storage, transportation, insurance & cleaning.
Travelling expenses may also be included, along with up to three months of vouched rent in temporary accommodation (both rent and temporary subsistence cannot be paid).
What Relocation Expenses Cannot Be Claimed Back?
Payments towards the cost of purchasing or building a house cannot be paid tax-free, and similarly, amounts paid towards either loans or bridging loan interest would also be considered taxable pay.
Records Needed for Employee Relocation Tax Relief
As previously noted, all relocation payments (other than temporary subsistence) must be matched with receipted expenditure, so any relevant receipts, invoices, statements and proofs of purchase must be kept by the employer. All such records must be retained for a period of six years from the tax year-end to which the records refer.
Related payroll insights article: SARP For Employers.
How EisnerAmper Ireland Can Help
At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers seeking the most beneficial solutions to their global mobility problems. From planning to execution, we can provide expert advice and insight every step of the way.Latest News →
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