I propose to take Questions Nos. 435 and 437 together.
I am advised by Revenue that the Small Benefit Exemption allows an employer to provide one tax free “qualifying incentive” per year to an employee, provided a number of conditions are satisfied.
Where all of the below conditions are satisfied no tax liability will arise:
- The qualifying incentive must be in the form of a voucher or other tangible benefit;
- The voucher or benefit cannot be part of any salary sacrifice arrangement between the employee and employer;
- The voucher or benefit cannot exceed €500 in value;
- Only one voucher or benefit may be given in any one year; and
- Any voucher awarded can only be used to purchase goods or services and cannot be exchanged in part or in full for cash.
If the value of the benefit exceeds €500, then the entire amount is liable to income tax, PRSI and USC.
There is no legislative requirement that the vouchers must be spent on goods or services in the Republic of Ireland, nor does it specify what goods and services may or may not be purchased. However, as stated above the voucher cannot be redeemed in full or in part for cash. Vouchers, which are fully or partially redeemable for cash, are considered perquisites, and therefore liable to tax in the usual way (i.e. subject to tax through the payroll when given to the employee).
Notwithstanding the above, the requirement that only one voucher issues per year is concessionally waived for the 2020 tax year, in circumstances where an employer wishes to recognise efforts of front-line or other key staff working during the COVID-19 crisis. Further guidance on this concession can be found on Revenue’s website, available here .
I have no plans to change the Small Benefit Exemption at present.
