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Department of Finance Consultation on the Tax Treatment of Travel and Subsistence Expenses for Employees/Office Holders

25 September 2015

The Department of Finance (DOF) has recently conducted a consultation in relation to the tax treatment of travel and subsistence expenses for employees and office holders, including company directors.

This review of the law and practice in relation to (a) the granting of tax deductions in respect of expenses of travel incurred by employees and office holders, and (b) the circumstances under which expenses of travel may be reimbursed free of tax by an employer to an employee or office holder, is of significance to all employees and company officers but in particular non-executive directors who may incur travel expenses to fulfil their role.

According to the consultation paper, the areas which have in recent times given rise to differing views on the tax treatment of expenses of travel include:

  • by employees or office holders on the return journey from home to work;
  • by non-executive directors on the return journey from home to attend board meetings;
  • by directors (generally of small companies) on the return journey from home to a workplace where most of the work is carried out at the workplace but an office is maintained in the director’s home where some administrative work (e.g. issuing company invoices, preparing VAT returns) is carried out;
  • by employees or directors on the return journey from home to a workplace where most of the work is carried out at the workplace but some of the work is carried out in the home; and  
  • by employees or directors on the return journey from home to a workplace where a small proportion of the work is carried out at the workplace (e.g. reporting to manager on performance, targets, etc.) but most of the work is carried out in the home. In some scenarios, the individual may opt to carry out the work at home while, in other cases, no workplace is provided by the employer.

The issue is of concern to directors in particular as expenses of travel incurred on journeys from home to work, work to home and between separate employments do not qualify for a tax deduction.

Specific instances where a tax deduction would not be granted include the travel expenses incurred (i) by a non-executive director on the return journey from home to attend a board meeting, (ii) by an external examiner travelling to a third level institution, and (iii) by a director (generally of a small company) on the return journey from home to a workplace.

The consultation is now closed but the DOF and the Office of the Revenue Commissioners have indicated that they intend to coordinate their response to the consultation, if an examination of the relevant legislative provisions is necessary.