Revenue eBrief 66/18, published on 23rd April 2018, contained guidance on the VAT treatment of staff secondments to companies established in Ireland from related foreign companies.
These guidance notes confirm that staff secondments are subject to VAT at the standard rate, being 23%. This applies even where both companies are connected and members of an international group. Revenue, however, have provided a concession whereby VAT will not be charged on payments in relation to the seconded staff provided that correct Irish PAYE and PRSI have been operated on these payments.
This concessionary treatment will only apply in situations where the staff members are seconded from a company established outside Ireland but which is part of the same corporate group as the recipient company and where the staff are seconded to an Irish established company or an Irish branch of a foreign company. In addition, the Irish company to which the employee is seconded must exercise control over the performance of his/her duties or the secondee must effectively have managerial responsibility for the operation of the Irish company or Irish branch. Finally, the PAYE and PRSI liabilities relating to the payments to the seconded employee must be paid over to the Irish Revenue in a timely manner.
If the company sending the employee does not charge in excess of the emoluments paid then no VAT liability will arise. However, where the company sending the employee charges the Irish company an amount which is in excess of the amounts payable to the employee, then the excess will be subject to VAT in the hands of the Irish company engaging the employee on the “reverse charge basis.”
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