Irish employment carried on outside the State
If your employee works for you outside of Ireland, their residence position will dictate their charge to:
A non-resident employee
In certain circumstances Revenue will issue a Pay As You Earn (PAYE) Exclusion Order. This is a certificate which will authorise you not to deduct Income Tax and USC from your employee where certain conditions are met.
A non-resident employee who carries out some duties in Ireland and some duties abroad
You should deduct Income Tax, USC and PRSI from your employee only on the portion of the duties exercised in Ireland.
A resident employee who carries out some duties in Ireland and some duties abroad
You should deduct Income Tax, USC and PRSI on all of your employee's income.
Your employee may also be liable to pay tax on their income abroad, therefore paying tax on the same income twice. In certain circumstances, your employee may be able to claim a credit during the tax year for the non-refundable foreign tax deducted. You can find out more about claiming this credit on the form Double Deduction 1.
Foreign earnings deduction
A resident employee may spend at least 40 days during a 12-month period working in certain countries on behalf of your company. If so you do not have to deduct Income Tax, USC and PRSI on all of the income earned. The amount that is not taxed depends on the number of days they spend abroad and is subject to a maximum amount of €35,000. The 40-day minimum applies for all years from 2016. Before 2016, the minimum was 30 days.
This tax treatment applies to a limited list of countries. The list can be found in the Tax and Duty manual, along with a formula for calculating taxable amounts.
Directors of Irish companies are chargeable to Income Tax in Ireland regardless of their residence position or where the duties of the director are exercised.
PRSI contributions may or may not be due. For advice contact the Department of Employment Affairs and Social Protection (DEASP).