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 are taxable.
Where the employee receiving such benefits is a director of the company concerned, the benefits are taxable regardless of the level of remuneration.
Where a company car is available for the private use of an employee the employee is chargeable to PAYE and PRSI in respect of that use. Travel to and from work is private use.
The notional pay to which PAYE and PRSI must be applied is determined by reference to the "cash equivalent" of the private use of the company car.
The percentage which is now applied to the open market value of the company car will be determined based only on business mileage as follows:
|Annual Business Kilometres||% of OMV|
|24,135 or less||30%|
|24,136 to 32,180||24%|
|32,181 to 40,225||18%|
|40,226 to 48,270||12%|
|48,271 and over||6%|
The notional pay to which PAYE and PRSI must be applied is determined by reference to the 'cash equivalent' of the private use of the van. The cash equivalent is 5% of the Original Market Value (OMV) of the vehicle supplied. The OMV must be calculated in the same manner as for cars.
Concession: There will not be a charge to tax in respect of a company van where all of the following four conditions below are met:
The van provided is essential for The purposes of The job.
The employer requires that The employee brings The van home
Any private use (other than travelling to and from work is prohibited), and
Most of the working day (80%) is spent away from the employer's premises.
There will not be a charge to tax in respect of a van which is in a 'van pool'. A van can be treated as being in a van pool if -
the van is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
any private use of the van by the employees is merely incidental to business use, and
it is not normally kept overnight at the home of any of the employees.
Where it is proposed to treat a van as being in a van pool but there is a doubt about that treatment, the position may be agreed in advance with the local Revenue Office.
PAYE 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 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/ equivalent loans for similar purposes at arm’s length to persons other than employees or their spouses. where the rate of interest is not less than the rate of interest at which the employer such as a bank may charge.
|Specified current rate for home loans||4%|
|Specified current rate for other loans||13.5%|
PAYE and PRSI are to be applied to the difference between the amount of interest paid or payable on the preferential loan in the tax year and the amount of interest which would have been payable in the tax year if the loan had been subject to the specified rate.
An employer can provide an employee with a small benefit to a value not exceeding €250 without applying PAYE and PRSI to that benefit.
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