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| Directors' & Employees' Subsistence Expenses |
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Introduction
Payments by an employer which do no more than re-imburse an employee for allowable subsistence expenses which were actually incurred, may be made tax-free in certain circumstances, in accordance with legislation. The expenses concerned must have been incurred “wholly, exclusively and necessarily” in the performance of the duties of the employment. |
Re-imbursement by Flat-Rate allowances or vouched expenses
Where an employee performs the duties of the employment while temporarily away from his/her normal place of work or is working abroad on a foreign assignment, allowable subsistence expenses can be re-imbursed on the basis of:
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 | Acceptable flat-rate allowances
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| Actual expenses which have been vouched with receipts. Where an employee’s allowable expenses are re-imbursed tax-free in these ways by an employer, then an income tax claim by the employee for those expenses does not arise. Time spent at the normal place of work and on journeys between home and the normal place of work, do not reckon as a qualifying absence. |
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Acceptable Flat-Rate allowances
There are two types of flat-rate allowance schemes which are acceptable for tax purposes. In both cases, a satisfactory recording and internal control system must be operated by the employer - see paragraph headed “Records to be kept - Audit of Records”.
The two schemes are: |
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| 1. | Re-imbursement of subsistence expenses up to the level of the prevailing schedule of Civil Service rates where the employee bears the relevant subsistence expenses (including accommodation and meals, as appropriate).
The Revenue Commissioners should be notified where such a scheme is used. However, formal approval to use the scheme is not required.
The schedule of rates based on the current relevant Civil Service subsistence rates for absence within the State are set out overleaf.
Details of Civil Service subsistence rates for certain foreign countries are available from any Revenue office.
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| 2. | Re-imbursement of subsistence expenses based on any other schedule of rates and related conditions (e.g. “country money” in the Construction Industry) which do no more than re-imburse the employee for actual expenditure incurred.
Revenue approval is required for such a schedule. |
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Normal place of work
“Normal place of work” is the place where the employee normally performs the duties of the office or employment. In most cases, this should not give rise to difficulty. The employer’s business premises will be regarded as the normal place of work for the employee where: |
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| Travel is an integral part of the job involving daily appointments with customers
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| The duties of the employment are performed at the various premises of the employer’s customers but substantive duties are also performed at the employer’s business premises. |
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The employee’s home would not be regarded as the normal place of work unless there is an objective requirement that the duties of the office or employment must be performed at home. It is not sufficient for an employee merely to carry out some of the duties at home.
Usually, the employer will provide the facilities necessary for the work to be performed at the business premises. Even where the employee has to do some work at home or to keep some equipment at home, the place where he/she resides is a matter of personal choice and it would not be regarded as a place of work.
Day allowances do not apply to employees who do not have a fixed place of work. |
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Subsistence expenses where business journeys involve travel direct from/to home
Where an employee proceeds on a business journey directly from home (rather than commencing the business journey from the normal place of work) or returns home directly, any subsistence expenses would be the lesser of the subsistence expenses actually incurred and the expenses which would have been incurred if the journey had started and finished at the normal place of work.
Travelling Expenses between Ireland and Overseas
The cost of travelling from home in Ireland to take up a foreign assignment and in returning home on its termination is regarded as business travel.
Records to be kept - Audit of records
Where the expenses are re-imbursed by way of flat-rate allowances, the employees need not keep, for tax purposes, a precise record of actual subsistence expenses. The employees would, however, be expected to provide to their employer a record showing, for each temporary absence from their normal place of work |
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| The date(s) and duration of the absence
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| The reason for the absence and
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| The location(s) involved. |
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Where re-imbursement is made on a vouched receipts basis, the system of vouching should also include the above details. A straightforward record of this kind would, in any event, be required for an employer’s financial and internal control purposes and it should therefore not involve additional paperwork.
If an employer has doubts about the adequacy of the tax accounting records for employees (or Directors), the Regional Revenue office can be consulted. All records relating to any re-imbursement of subsistence expenses should be retained by the employer for examination in the event of an audit. The records must be kept for six years unless the Revenue Commissioners state otherwise. |
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Income Tax expenses claim by employee
Re-imbursement of allowable expenses without deduction of tax in accordance with acceptable schemes is an alternative to tax claims by the employee for expenses deductions. An employee retains the option to claim an expense deduction in respect of actual allowable subsistence expenses. Where the employee decides to make such claims, any re-imbursement of expenses by the employer, including any flat-rate allowances, would be regarded as pay and taxable accordingly.
Further Information
This leaflet is for general information only. You can get further information by visiting Revenue’s website at www.revenue.ie or by phoning (within the Republic of Ireland only) your Regional Revenue Office whose LoCall number is listed below. |
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| Border Midlands West Region
Cavan, Monaghan, Donegal, Mayo, Galway, Leitrim, Louth, Longford, Offaly, Roscommon, Sligo,
Westmeath - 1890 777 425 |
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| Dublin Region
Dublin (City and County)- 1890 333 425 |
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| East & South East Region
Carlow, Kildare, Kilkenny, Laois,Meath, Tipperary, Waterford,Wexford, Wicklow - 1890 444 425 |
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| South West Region
Clare, Cork, Kerry, Limerick - 1890 222 425 |
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| If you are calling from outside the Republic of Ireland, please phone 00 353 (1) 647 4444. |
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Schedule based on current Civil Service Subsistence Rates for absences within the State.
The following schedule of rates has been agreed under the Scheme of Conciliation and Arbitration for the Civil Service. |
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Domestic Subsistence rates from 5th March 2009
| Class of
Allowances | Overnight rates | Day Rates | Normal
Rate | Reduced
Rate | Detention
Rate | 5 to 10
hours | Over 10 hours | | A Class | €108.99 | €100.48 | €54.48 | €13.71 | €33.61 | | B Class | €107.69 | €92.11 | €53.87 | €13.71 | €33.61 |
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Please note that the Class C rate ceases to apply with effect from 1 September 2004. Thereafter, subsistence payments for staff in grades to which the Class C rates currently apply will be paid at the Class B rates.
Notes on Schedule:
There are detailed rules and conditions governing the payment of subsistence allowances in the Civil Service. The following notes are indicative of some of the relevant provisions |
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| (i) | Class of Allowances
The rate of allowance depends on the grade of officer. The approximate grade levels, and present minimum annual salaries, are broadly as follows: |
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Class A:
Assistant Principals, higher grades and equivalents. All grades with the same salary scales as Engineer Grade 11 (Civil).
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Class B:
Higher Executive and Executive Officers, Administrative Officer, Staff Officer, whose pay is above the maximum of the Clerical Officer, Clerical Officers on and above the CO standard scale maximum, and equivalents. |
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| (ii) | Overnight Allowance
Overnight Allowance (over 24 hours absence)
An overnight allowance covers a period of 24 hours from the time of departure, as well as any further period not exceeding 5 hours, which is necessarily spent away from the normal place of work. Where an absence exceeds 24 hours, a day allowance at the appropriate rate may be paid only if the last period of 24 hours is exceeded by 5 or more hours.
Normal Rate
This is payable for absences up to 14 nights.
Reduced Rate
This is payable for each of the next 14 nights.
Detention Rates
This is payable for each of the next 28 nights.
Absences Over 56 Nights
Employers should make application to the appropriate Revenue Office with a view to agreeing the rate to be applied. The period of subsistence at any one location is limited to six months. Any departure from this position e.g. for continuation of the subsistence period for a short duration, is considered on the circumstances of the individual case.
Continuous Absence
Certain absences from a particular temporary location would not be regarded as breaking the continuity of stay for the purpose of reducing the subsistence allowance. These absences would include absences of not more than two nights due to a return on official business to the employee’s normal place of work, plus any nights of a weekend or public holidays or return visits home or annual leave. These absences would not, of course, qualify for subsistence allowance.
Teamworkers
Where employees are working as team members and it is necessary for junior team members to stay in the same accommodation as senior team members who qualify for a higher rate of subsistence, such higher rate may also apply to the junior team members |
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| (iii) | Day Allowances:
(a) 5 to 10 hours absence
(b) over 10 hours absence
A day allowance applies to continuous absence of 5 hours or more, provided the absence is not at a place within 5 kilometres of the employee’s home or normal place of work. There are two categories of day allowance, namely, 5 to 10 hours absence and over 10 hours absence. |
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Schedule based on current Civil Service Subsistence Rates for absences outside the State
Details of quantum of Civil Service subsistence rates for certain foreign countries are available from any Regional Revenue Office.
The Civil Service schedule of rates may be applied in the following manner in respect of temporary (up to six months) absence: |
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| Period of Assignment Abroad | % of Subsistence Rate for
relevant location | | First month | 100% | | Second and Third month | 75% | | Fourth, Fifth and Sixth month | 50% |
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The rates may be used only in respect of the reimbursement of allowable subsistence expenses where the employee is working abroad on a foreign assignment. “Working abroad on foreign assignment” means that the employee is actually performing the duties of the employment abroad for a temporary period. Where actual vouched expenses exceed the flat rate allowances such vouched expenses may be used instead of flat rate allowances.
Long term Absences
For long term absences (where assignment period is greater than six months), reimbursement of allowable subsistence expenses may be in the following manner: |
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| Period of Assignment Abroad | Allowable Subsistence | First month of assignment
(to facilitate the employee obtaining
self catering accommodation) | Up to the Overnight Rate | | Remainder of Assignment | Up to the cost of reasonable
accommodation plus 50% of the
day rate (10 hours) for the location |
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| Any departure from the above is only considered having regard to the particular circumstances of the individual case. The position as outlined is, of course, only relevant to the extent to which the employee remains within the charge to Irish Tax. |
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| Should you require any assistance in relation to this matter please email me here |
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