VAT treatment of staff secondments

VAT treatment of staff secondments

Revenue has provided an April 2018 update on the VAT treatment of staff secondments and their concession on certain staff secondments to companies established in the State from related foreign companies.

In general, the provision of staff, including secondments, is subject to the standard rate of VAT (23%). A secondment means the temporary transfer of a worker to another position or employment.

Where a foreign company sends staff on secondments to an Irish-established company and the staff remain employees of the foreign company, VAT is chargeable and therefore the foreign entity would be required to register for VAT in Ireland. However, Revenue provide for concessionary treatment for certain secondments such that no VAT is charged on salaries paid to the seconded staff on which PAYE and PRSI has been paid.

The concessionary treatment only applies where the staff are:

  • From a company not established in Ireland
  • Seconded to an Irish-established company or branch of a foreign company
  • Seconded to companies that are members of a group of companies

A group exists where one company is a 51% subsidiary of the other company or both companies are 51% subsidiaries of a third company.

So, if the above criteria are met and both employer and employee PAYE and PRSI liabilities relating to the salaries paid to the employee in respect of work done in that period are paid in a timely basis, whether by the employer company, the company or branch to which the employee is seconded or any other person, then the salary paid for the secondment of the employee to the company or branch, shall not be liable for VAT.

For additional information please contact a member of the VAT team.