Staff discounts

An employer may give their employee a discount on goods or services that are produced or sold in their business. This section sets out the tax treatment of the same.

When is a staff discount tax-free?

A staff discount is not a taxable benefit in kind where:

• the amount paid by the employee is greater than or equal to the costs incurred by the employer to provide the item
• and
• the goods cannot easily be changed into money (the employee is not able to sell the item easily).

When is a staff discount taxable?

A staff discount is taxable in the following scenarios:

• The price paid is below the employer's acquisition or production cost
• The goods can be easily changed into money
• In-house vouchers or discounts notes.

Where the price is below employer's acquisition or production costs

A taxable benefit in kind arises where an employer provides a discounted item to an employee and both of the following apply:

• the employee pays an amount less than the costs incurred by the employer to provide them with the item
• and
• the employee is not able to sell the item easily.

In these cases, the difference between the employer's costs and the price paid by the employee is a taxable benefit. The employee is chargeable on the benefit under the Pay As You Earn (PAYE) system to:

• Income Tax
• Pay Related social Insurance (PRSI)
• and
• Universal Social Charge (USC).

Where the goods can be easily changed into money

A taxable benefit in kind arises where an employee receives a discount item from an employer that they can easily sell.

In these cases, the difference between the value of the item and the price paid by the employee is a taxable benefit. The employee is chargeable on the benefit under the PAYE system to:

• Income Tax
• PRSI
• and
• USC.

In-house vouchers or discount notes

A taxable benefit in kind arises where an employee receives in-house vouchers or discount notes from an employer. These are in-house vouchers or discount notes which are:

• based on past purchases
• and
• may be used against future purchases.

In these cases, the value of the taxable benefit is generally the face value of the voucher. The face value of a voucher is the amount of money, or the value of goods, you receive when you use it. The employee is chargeable on the benefit under the PAYE system to:

• Income Tax
• PRSI
• and
• USC.

The Small Benefit Exemption may apply where an employer provides vouchers in the year and the required conditions are met.