The Finance Act 2015 introduces a new exemption from Irish income tax, USC and PRSI for the reimbursement of vouched travel and subsistence expenses incurred by non-Irish resident directors attending “relevant meetings” i.e. meetings attended in their capacity as director. The exemption only applies to a director who does not devote a substantial amount of his/her time to the services of a company in a managerial or technical capacity. This would typically cover non-executive directors (NEDs) and is likely to be particularly relevant for the Irish-based operations of global (re)insurers.

The exemption is effective from 1 January 2016 and does not apply retrospectively (despite earlier lobbying for this to happen).

The measure is broadly welcome, particularly by the insurance and wider FDI sector, as it removes the disincentive that existed for senior executives to travel to Ireland to participate on the boards of Irish subsidiaries. However, it does leave Irish resident directors at a disadvantage. For example, Irish resident NEDs are taxable on expenses incurred while travelling to directors’ meetings in Ireland whereas a non-resident NED, travelling from abroad, is not taxable on their expenses. This anomaly will hopefully be addressed in the near future and further consultation with the Department of Finance and Revenue Commissioners is expected.

Contributed by Padhraic Mulpeter