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Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

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Liability to USC and Income Levy for Employees in Non-Tax Treaty Countries

Revenue's eBrief No. 82/11 differs from its companion eBrief No.81/11, in that it sets out issues in relation to the USC where a Double Taxation Agreement does not exist.

eBrief No. 82/11 notes that a charge to Irish income tax does not generally arise where an individual is not resident in Ireland for tax purposes for a relevant tax year (or part of a tax year in ‘split year’ cases) and where he or she exercises the duties of a private sector employment wholly outside Ireland. In such cases, Revenue will on application, issue a PAYE Exclusion Order to the employer in respect of such individual. Revenue confirms in eBrief No. 82/11 that “USC is not payable in respect of the employment income of a non-resident individual that is attributable to duties exercised wholly outside Ireland, where there is no charge to income tax in Ireland”. For this purpose the tax treaty status of the country of resident is irrelevant.

The obligation for the tax year 2012 to deduct USC for employees in cases where a PAYE Exclusion Order is obtained or in cases where it is not obtained is also clarified in the eBrief. In general, if an Exclusion Order is obtained, employers will not be required to deduct USC however, if employers do not obtain an Exclusion Order, USC must be deducted when making the payment and employees may apply for a repayment of USC after the end of the tax year.

For 2011, in cases where USC was deducted by an employer in respect of an employee who was resident and working in a non-tax treaty country, the employee may claim a repayment of USC from Revenue. This is the position for cases where the employer holds or does not hold a PAYE Exclusion Order for such employee.

In relation to the Income Levy, which applied for 2009 and 2010, Revenue confirms in eBrief No. 82/11 that as with USC, the treatment that applies to income tax extends to the income levy. This means that employees in these circumstances may apply to Revenue for a repayment of any income levy that was deducted and paid over to Revenue.

The full text of eBrief No. 82/11 is available on here.