Benefits-in-kind, such as private use of a company car, free or subsidised accommodation and preferential loans, received from an employer, by an employee whose total remuneration (including benefits-in-kind) is €1,905 or more in a tax year, are taxable (subject to certain exceptions).
Where the employee receiving such benefits is a director of the company concerned, the benefits are taxable regardless of the level of remuneration. The liability to tax also applies in respect of benefits provided by an employer for a member or members of an employee's family or household.
In addition, employees and directors are chargeable to tax in respect of 'perquisites' from their employment, that is, remuneration in non-money form which is convertible into money or money's worth, for example the payment of club subscriptions and medical insurance premiums on an employee's behalf.
Where a company car is available for the private use of an employee, the employee is chargeable to PAYE, PRSI & USC in respect of that use.
Where a car is provided for the first time in the tax years 2009 et seq., the notional pay to which PAYE, PRSI & USC must be applied is determined by reference to the "cash equivalent" of the private use of a company car. The 'cash equivalent' benefit is calculated as follows
Original Market Value (OMV) X A, where
A is a percentage determined by
- (i) The amount of business mileage and
- (ii) The CO2 emissions category of the category of the car, as per the following table:
|Lower km - Upper Km||A,B,C OMV%||D,E OMV%||F,G OMV%|
|0 - 24,000 km||30%||35%||40%|
|24,001 - 32,000 km||24%||28%||32%|
|32,001 - 40,000 km||18%||21%||24%|
|40,001 - 48,000 km||12%||14%||16%|
|48,001 - +||6%||7%||8%|
The CO2 emission categories are as follows
|Vehicle Emission category||CO2 Emissions (CO2 g/KM)||OMV %|
The cash equivalent is then reduced by any amount required to be made good, and actually made good, by the employee directly to the employer in respect of any part of the cost of providing or running the car.
PAYE, USC and PRSI apply to the benefit derived by an employee from certain loans at preferential rates of interest.
A "preferential loan" means a loan, made by an employer to an employee or former employee, the spouse of an employee or former employee in respect of which no interest is payable, or interest is payable at a rate lower than the "specified rate". It does not however include such a loan where the rate of interest is not less than the rate of interest at which the employer in the course of the employer's trade makes equivalent loans for similar purposes at arm's length to persons other than employees or their spouses.
|The current specified rates are|
|Qualifying Home Loans||4%|
|All Other Loans||13.5%|
The specified rate depends on whether the loan is a qualifying home loan or a loan for other purposes. A qualifying home loan is a loan which qualifies for mortgage interest relief. The specified rates are varied from time to time depending on changes in commercial rates.
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