05 May 2016
The Finance Act 2015 introduces a new exemption from Irish income tax, USC and PRSI for the reimbursement of vouched travel and subsistence expenses incurred by non-Irish resident directors attending ‘relevant meetings’ (i.e. meetings attended in their capacity as director). The exemption only applies to a director who does not devote a substantial amount of his/her time to the services of a company in a managerial or technical capacity. This would typically cover non-executive directors (NEDs).
The exemption is effective from 1 January 2016 and does not apply retrospectively (despite earlier lobbying for this to happen).
The measure is broadly welcome, as it removes the disincentive that existed for senior executives to travel to Ireland to participate on the boards of Irish subsidiaries. However, it does leave Irish resident directors at a disadvantage. For example, Irish resident NEDs are taxable on expenses incurred while travelling to directors' meetings in Ireland, whereas a non-resident NED, travelling from abroad, is not taxable on their expenses. This anomaly will hopefully be addressed in the near future and further consultation with the Department of Finance and Revenue Commissioners is expected.