Taxation of Long Service Awards

The tax treatment of long service awards was set out in the Topical Questions section of Tax Briefing Issue No 39 (March 2000). The purpose of this article is to set out the revised conditions and limits that apply with effect from 1 January 2002.

Where awards are made to directors or other employees as testimonials to mark long service, such awards are normally taxable. Where, however, an award takes the form of tangible articles of reasonable cost, tax will not be charged provided that:

• The cost to the employer does not exceed €50 for each year of service
• The award is in respect of a period of service of not less than 20 years
• No similar award has been made to the recipient within the previous 5 years.

This treatment applies to awards made to directors as well as other employees. It does not apply where awards are made in cash or in the form of vouchers, bonds, etc.