Payments to employees
Shadow payroll
Some employers may have dual payroll withholding responsibilities in both Ireland and a foreign jurisdiction. If so, they will often run what is known as a ‘shadow payroll’ in respect of an employee’s taxable income.
Where pay dates in foreign jurisdictions do not align with Irish pay dates:
- the payroll submission can be aligned with the Irish employer’s next pay date for equivalent Irish employees.
- Example
A UK individual is assigned to perform duties in the State for an Irish company, IRL Co. The individual is paid by the UK employer, UK Co. on the 14th and 28th of the month. IRL Co pays their local employees on the 25th of the month. The assignee’s pay details for the 28 of January and the 14 of February should be included in IRL Co.’s payroll submission on 25 February.
Calculating Irish work days
You should provide a best estimate of the number of days an individual works in Ireland. If there are more (or less) days than originally estimated the pay should be amended in the following payroll submission.
Applications for the release from the obligation to operate PAYE
An employer may apply to Revenue and be granted a release from the obligation to operate PAYE. If this application is subsequently rejected, the employer should operate PAYE from that point in time. Revenue will not penalise employers where the original application is made in good faith.
Note
The above will only apply where there is a clear expectation that the release will be granted. Where it is clear that the conditions as set out in the employment article (generally article 15) of the relevant treaty are unlikely to be met, the provisions of Chapter 4 of part 42 of the Taxes Consolidation Act will apply.
The following procedures will apply:
- The employer should include all income paid to the employee from the date an assignment commences including the income from the date PAYE is applied.
- The Revenue Payroll Notification (RPN) will operate on a week 1 basis.