In a new briefing document, Revenue has clarified the rules around the taxation of bonus payments to employees of Irish companies who work under a “PAYE exclusion order”. Exclusion orders exempt workers from paying ordinary Irish income taxes on their Irish income when they are not resident in the State and are paying taxes in another jurisdiction. The tax liability hinges on when the bonus is paid versus when the bonus is earned. However, where an exclusion order is in place for someone working abroad, taxes apply on an “earned basis”, meaning the relevant tax year is the one in which the income was earned. An employee currently working abroad with an exclusion order but who worked in Ireland for all of last year would owe tax on a bonus granted in respect of 2020, even if the bonus was received while the exclusion order was in effect.

Source: Irish Independent July 20, 2021 01:30 UTC