PAYE

PAYE for Irish Employers

Irish businesses who engage employees are obliged to register as employers and compute, deduct and pay over monthly to the revenue commissioners.

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PAYE for Non-Irish Sourced Employment (Foreign Employers)

Overseas Employers whose workers perform duties of Employment in Ireland (with some exceptions below) are obliged to account for and deduct Irish PAYE.

Position with effect from 1 January 2006 as regards non-Irish sourced employment income and the PAYE system
With effect from 1 January 2006 -

• the income of a non-Irish sourced employment attributable to the performance in the State of the duties of that employment is chargeable to income tax under what is known as Schedule E and is within the scope of the Pay As You Earn (PAYE) system of deductions at source;
• the income of a non-Irish sourced employment attributable to the performance outside the State of the duties of that employment, whilst it may be chargeable to Irish tax in the hands of the employee, is not within the scope of the Pay As You Earn (PAYE) system of deductions at source.

Remittance Basis of Taxation - Impact on employment income with effect from 1 January 2006
With effect from 1 January 2006 -

• the income of a non-Irish sourced employment attributable to the performance in the State of the duties of that employment no longer qualifies for the remittance basis of taxation as it is now chargeable to income tax under what is known as Schedule E [and is within the scope of the Pay As You Earn (PAYE) system of deductions at source] whether or not remitted to the State;
• the income of a non-Irish sourced employment attributable to the performance outside the State of the duties of that employment, remains, where chargeable to tax in the State, chargeable under Case III of Schedule D and qualifies for the remittance basis of taxation (assuming, of course, as outlined in paragraph 1.3.1 above, that the employee was either not Irish domiciled or, being an Irish citizen, was not ordinarily resident in the State).

Irrespective of the tax residence position of the employee or the employer, income from a non-Irish employment attributable to the performance in the State of the duties of that employment is chargeable to income tax in the State and is within the scope of the PAYE system of deductions at source.

PAYE Exceptions for Employers Registering as an Irish Employer

Under the terms of the Employments Article of Double Taxation Agreements (DTAs) between Ireland and other countries, the income attributable to the performance in the State of the duties of an employment may be relieved from the charge to Irish tax and tax deducted under PAYE must be repaid.

Revenue will not require an employer to operate PAYE where the following criteria are satisfied -

• the individual is resident in a country with which the State has a Double Taxation Agreement and is not resident in the State for tax purposes for the relevant tax year;
• there is a genuine foreign office or employment;
• the individual is not paid by, or on behalf of, an employer resident in the State;
• the cost of the office or employment is not borne, directly or indirectly, by a permanent establishment in the State of the foreign employer; and
• the duties of that office or employment are performed in the State for not more than 60 working days in total in a year of assessment and, in any event, for a continuous period of not more than 60 working days

PAYE Tax

PAYE Service