Taxes Consolidation Act 1997 section 201

Exemptions and reliefs in respect of tax under section 123

Section 201 provides exemptions and reliefs from income tax on termination payments made to employees on retirement or removal from office or employment.

• The basic exemption is €10,160 plus €765 for each complete year of service, with additional relief available under Schedule 3 up to a further €10,000.
• The first €5,000 of retraining costs paid by an employer as part of a redundancy package is exempt from income tax, provided the training is skills-based, available to all eligible employees, and completed within six months of termination.
• Payments up to a lifetime limit of €200,000 made on account of the employee's death in service, injury, or disability are exempt, as are restrictive covenant payments and certain pension scheme lump sums.
• From 1 January 2011, the maximum lifetime amount that can be received tax-free as part of a termination payment is capped at €200,000, excluding retraining costs and death, injury, or disability payments.