Free use of assets (other than accommodation, company cars or vans)
You may choose to provide your employee with free use of your assets, other than accommodation, company cars or vans. This is a taxable benefit and they will have to pay Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) on that benefit.
'Free use' means that you allow your employee use the asset without giving them ownership of it.
Calculation of benefit
The value of the benefit is 5% of the market value of the asset. The market value is the amount you would have been able to sell the asset for to a stranger. The market value used in the year you first provide the benefit to an employee is the value you must use annually.
The market value cannot be changed if:
- you provide the asset to a different employee or
- the asset is damaged
- the asset increases in value.
Any payment that your employee makes to use the asset reduces the value of the benefit. You must report the value of the benefit as part of the director's gross pay in the period which it is provided.
Five years ago your company purchased a painting for €5,000. Your company then gives the painting to your managing director to be displayed at his home. The value of the benefit is €5,000 @ 5% = €250. Your managing director must pay tax on this €250.
The painting is now worth €8,000. The calculation of the benefit is still based on the original cost of the painting. If you gave the painting to another employee the calculation would also still be based on the original cost.
You must treat all maintenance costs that you pay towards the asset as a taxable benefit. Any payments that your employee makes towards these costs reduces the taxable amount.
If you provide the asset free for only part of the year, you must base your calculation for that portion of the year.
Free use of 'lands'
From 2005, the method for calculating the free use of lands is the same as for premises.
Loan of art objects
Art objects may be loaned without paying tax, in one specific circumstance. They must be kept in a building of significance, where Revenue agree that the public have reasonable access to view the object and the building.