What tax reliefs are available for employees who telecommute
The pandemic has developed working from home since March - full-time or part-time. Revenue refers to this as "eWorking" and the government has implemented a tax relief for eligible employees. Here's what employers and employees should know about this scheme.
New tax relief available for eWorking
This tax relief is intended to cover the cost of working from home. In fact, by teleworking, the employee can use additional electricity, additional heating or need high-speed internet. As an employer, you can pay an employee up to $3.20 per day without deducting PAYE, PRSI, or USC. If you pay your employees more than €3.20, the difference paid will be taxable.
What is eWorking and which employees are considered e-workers ?
This tax relief is applicable when an employee works from home - full time or part-time - instead of working from his office in the company. Directors who work in the business can claim this tax relief too. This does not apply when an employee brings some of their work home to finish from home outside their working hours.
An employee is an e-worker if he works for long periods outside his usual place of work. During this period, they can connect to a computer, remote working environment, send and receive e-mail or files remotely, or develop ideas, products and services.
An employee who does not usually work in the office is not considered an e-worker. For example a sales representative who spends most of his time on business trips meeting with clients and potential clients, although he performs certain tasks in the office environment, these tasks are only a small part of his role. Thus, even when these tasks are carried out at their home and not in the company, this type of employee cannot benefit from the €3.20 tax-free.
Does the tax relief apply to travel?
Under no circumstances can travel expenses between the employee's home and his place of work be reimbursed tax-free. This has not changed although many people divide their working time between home and office.
On the other hand, if an employee has to travel to other places to carry out his duties (site visits, meetings at customer offices, etc.), he is entitled to claim the usual travel and subsistence expenses.
Please note, if an employee claims travel and subsistence expenses on the same day that the employer pays him €3.20, the €3.20 will be taxable.
What are the rules for the employer ?
Most employers don't pay $3.20 / day and there is no way to force them to do so. This allowance is entirely voluntary and is not an obligation of the employer. Indeed, employers may consider that teleworking is not a situation chosen by the company. In addition, it could be argued that an employee is already saving significant amounts on transportation and lunch costs and therefore does not need any additional benefits.
What are the procedures for the employee receiving an eWorking allowance ?
If your employer pays you €3.20 per day for every day you work from home, you don't have to do anything. You will see the amount shown on your payslip appear as a non-taxable item. In many cases, you can also receive it as a separate payment. It is not necessarily paid on a monthly basis.
If your employer does not pay you the €3.20 per day, you can enter this credit from your taxable income on your next tax return. The relief, in this case, would be based on 10% electricity and heat, and 30% on broadband, distributed according to the number of days worked at home during the year.
Make sure that you keep the invoices relating to your claim for six years.