The Small Benefit Exemption Scheme

Just a courtesy reminder of the Irish Government’s small benefit scheme.

If you are looking to give an ROI employee a reward at Christmas then why not avail of the Revenue’s Small Benefit Exemption Scheme and save the employee and you the employer payroll taxes.  For employees on Irish payroll this is tax efficient for the company and also for the employee as it is tax, USC and PRSI free for both. 

The Small Benefit Exemption Scheme was increased to €1,000 (previously €500) per year.

The benefit must be non cash therefore a voucher or gift card for the purchase of goods would meet the conditions of the scheme.

You can only give up to two vouchers per calendar year.

The cumulative value of the vouchers should not exceed €1,000 in a single year.

This voucher is tax free for the employee and tax free for the employer (no tax/usc/prsi).

The voucher cannot be exchanged for cash in full or in part.

The voucher does not form part of a salary sacrifice arrangement.

The business must provide the voucher to the employee.  The voucher must be paid for out of the company funds, e.g. company bank account or company credit card.

If the benefit provided exceeds €1,000 the full benefit is taxable.

All cash payments are salary and are fully taxable.

Please note that the director/employee cannot purchase the voucher themselves and then seek reimbursement from the company.

A €1,000 cash payment to an employee could cost the employer over €2,000 for a higher rate taxpayer.

Under this small benefits scheme the total cost to the employer is €1,000.

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