Dáil Éireann Debate, Tuesday - 22 March 2022
270. Deputy Bríd Smith asked the Minister for Finance if, he will examine the current reimbursement rates (details supplied) for travel connected with business and work for employees given rising fuel costs; and if he will make a statement on the matter. [14931/22]
View answerI am advised by Revenue that arising from an employee’s entitlement to a tax deduction under section 114 of the Taxes Consolidation Act 1997, in respect of certain expenses, there exists a long-standing Revenue practice under which employers may reimburse tax-free to employees the expenses of travel and subsistence relating to that travel, subject to certain conditions being fulfilled.
The conditions under which the reimbursement to employees of the expenses of travel and subsistence may generally be made without deduction of tax are as follows:
(a) the employee must be temporarily away from his/her normal place of work in the performance of the duties of his/her employment;
(b) the travel expenses must be necessarily incurred in the performance of the duties of the office or employment, and
(c) arising from a long-accepted position, supported by tax case law, the expenses of subsistence must attach to travelling necessarily incurred in the performance of the duties of the office or employment.
The reimbursement to an office holder or employee of expenses of travel and subsistence is a matter for the relevant employer. Where an employer reimburses his/her employee for travel and subsistence, it may be on the basis of either actual vouched expenses or applying a flat rate allowance.
Vouched Expenses
Where travel expenses are reimbursed to an employee based on actual vouched expenses, then, provided the relevant conditions are satisfied and the employer retains receipts, Revenue will disregard for income tax purposes the reimbursement of such vouched expenses by her/his employer.
Flat Rate Allowance
Alternatively, provided the employee bears the cost of all expenses of travel necessarily incurred in the performance of the duties of his/her employment (and bears the cost of subsistence relating to such travel), Revenue will disregard for income tax purposes the reimbursement of expenses of travel and subsistence, where such reimbursement is made by way of:
(a) a flat rate up to, but not exceeding, the prevailing Civil Service rates for travel and subsistence, or
(b) a flat rate based on any other schedule of rates and related conditions of travel and subsistence, which do no more than reimburse the employee for actual expenditure necessarily incurred.
Furthermore, notwithstanding that expenses of travel are reimbursed by an employer, an office holder or employee retains her/his statutory right to claim tax relief, in accordance with section 114, against her/his emoluments of the office or employment in respect of actual allowable expenses incurred. However, where the employee decides to make such claims, any reimbursement of expenses by the employer, including any flat rate allowances, is regarded as pay and taxed accordingly.
The Civil Service rates for travel and subsistence allowances are available on Revenue’s website. The setting of these rates is a matter for the Minister for Public Expenditure and Reform.
In addition, comprehensive guidance on the tax treatment of the re-imbursement of expenses of travel and subsistence to office holders and employees can be found in Tax and Duty Manual Part 05-01-06 available on Revenue’s website.
