Under current tax legislation, the payment or reimbursement of travel expenses are only exempt from Irish payroll taxes to the extent that the expenses are incurred ‘wholly, exclusively and necessarily’ in the performance of the employee’s or director’s duties. In practice, for non-executive directors these expenses incurred may include flights, accommodation and other general expenses incurred during their time in Ireland. Previously, many tax practitioners took the view that such expenses met the legislative wholly, exclusively and necessarily tests and so should not be subject to Irish payroll taxes. However, following the issuing of an e-brief in 2014 by the Revenue (Revenue e-brief 61/2014 – Expenses of Travel of non-executive directors attending board meetings) the appropriate interpretation of the legislation has become unclear.
In their 2014 e-brief Revenue clarified their view on the interpretation of the travel expenses legislation. They confirmed that in general such expenses incurred by a non-executive director in the attendance of board meetings should not be exempt from payroll taxes. This is seen as a harsh interpretation and with greatest impact on non-Irish resident directors travelling to Ireland. For such individuals the payment or reimbursement of genuine costs of travelling to and staying in Ireland for board meetings should not in our view be treated the same as taxable directors’ fees.
It is hoped that the consultation process will result in clarification or changes to the current law and practice which recognises that not all directors’ travel expenses should be viewed equally, particularly in the context of non-Irish resident directors.
To find out more about the tax treatment of travel and subsistence expenses, this consultation process and directors’ remuneration in general please contact Partner at Nexus Taxation, Patrick McClafferty firstname.lastname@example.org