It's been a busy month for eBriefs from Revenue – issue 28/2006 addresses the application of a direction under TCA97 s985E.

TCA97 s985E was introduced by FA06 s15, and, as the note has it, it provides that so much of the income of a foreign office or employment of an individual as is attributable to the performance in the State of the duties of that office or employment is, with effect from 1 January 2006, chargeable to income tax under Schedule E (instead of Case III of Schedule D).

The key issue here of course is that Schedule E implies the operation of PAYE, but the section does allow for an apportionment between foreign employment (non-PAYE) and Irish employment. A direction from Revenue for any apportionment must be applied for. The eBrief sets out the circumstances where an apportionment may be operated with making an application. These are:

1. where there is certainty as to the portion of the employment income assessable to income tax under Schedule E and to which PAYE may be applied (for example, where an individual works in the State under a set work pattern or is assigned into the State for a predetermined period of time): and
2. in respect of the income of temporary assignees where the obligation to operate PAYE is relieved in accordance with the criteria described in Revenue e-Brief No. 9 of 2006.

The characteristics of “temporary assignees”, per eBrief No 9, are:

1. the individual is resident in a country with which the State has a Double Taxation Agreement and is not resident in the State for tax purposes for the relevant tax year;
2. there is a genuine foreign office or employment;
3. the individual is not paid by, or on behalf of, an employer resident in the State;
4. the cost of the office or employment is not borne, directly or indirectly, by a permanent establishment in the State of the foreign employer; and
5. the duties of that office or employment are performed in the State for not more than 60 working days in total in a year of assessment and, in any event, for a continuous period of not more than 60 working days.

This matter is one of a series of FA06 PAYE matters where we had sought urgent clarification – the operation of PAYE after all has immediate impact. Some matters still remain outstanding, for example the operation of TCA97 s985F which gives Revenue the power to deem a subcontractor's employees to be the employees of the contractor, with corresponding PAYE consequences.