Section 472 Employee tax credit

(1)(a) In this section-

“appropriate percentage”, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year;

“emoluments” means emoluments to which Chapter 4 of Part 42 applies or is applied, but does not include-

(i) emoluments paid directly or indirectly by a body corporate (or by any person who would be regarded as connected with the body corporate) to a proprietary director of the body corporate or to the spouse, civil partner, child or child of the civil partner of such a proprietary director, and

(ii) emoluments paid directly or indirectly by an individual (or by a partnership in which the individual is a partner) to the spouse, civil partner, child or child of the civil partner of the individual;

“director” means-

(i) in relation to a body corporate the affairs of which are managed by a board of directors or similar body, a member of that board or body,

(ii) in relation to a body corporate the affairs of which are managed by a single director or similar person, that director or person, and

(iii) in relation to a body corporate the affairs of which are managed by the members themselves, a member of the body corporate,

and includes any person who is or has been a director;

“proprietary director” means a director of a company who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;

“specified employed contributor” means a person who is an employed contributor for the purposes of the Social Welfare Consolidation Act 2005, but does not include a person-

(i) who is an employed contributor for those purposes by reason only of section 12(1)(b) of that Act, or

(ii) to whom Article 81, 82 or 83 of (S.I. No. 312 of 1996), applies.

(b) For the purposes of the definition of “proprietary director”, ordinary share capital which is owned or controlled as referred to in that definition by a person, being a spouse, a civil partner, a minor child, or a minor child of the civil partner, of a director, or by a trustee of a trust for the benefit of a person or persons, being or including any such person or such director, shall be deemed to be owned or controlled by such director and not by any other person.

Amendments

Finance Act 2007 section 128

Finance (No. 3) Act 2011 section 1(2).

(2) The exclusion from the definition of “emoluments” of the emoluments referred to in subparagraphs (i) and (ii) of that definition shall not apply for any year of assessment to any such emoluments paid to an individual, being a child (other than a child who is a proprietary director) to whom subparagraph (i) or (ii) of that definition relates, if for that year-

  (a)(i) the individual is a specified employed contributor, or

(ii) the Income Tax (Employments) Regulations 2018 ( S.I. No. 345 of 2018 ), in so far as they apply, have, in relation to any such emoluments paid to the individual in the year of assessment, been complied with by the person by whom the emoluments are paid,

(b) the conditions of the office or employment, in respect of which any such emoluments are paid, are such that the individual is required to devote, throughout the year of assessment, substantially the whole of the individual’s time to the duties of the office or employment and the individual does in fact do so, and

(c) the amount of any such emoluments paid to the individual in the year of assessment are not less than €4,572.

Amendments

Finance Act 2001 section 2(3).

(3) Where an individual is in receipt of profits or gains from an office or employment held or exercised outside the State, such profits or gains shall be deemed to be emoluments within the meaning of subsection (1) if such profits or gains-

(a) are chargeable to tax in the country in which they arise,

(b) on payment by the person making such payment, are subject to a system of tax deduction similar in form to that provided for in Chapter 4 of Part 42,

(c) are chargeable to tax in the State on the full amount of such profits or gains under Schedule D, and

(d) if the office or employment was held or exercised in the State and the person was resident in the State, would be emoluments within the meaning of that subsection.

(4) Where, for any year of assessment, a claimant proves that his or her total income for the year consists in whole or in part of emoluments (including, in a case where the claimant is a married person assessed to tax in accordance with section 1017, or a civil partner assessed to tax in accordance with section 1031C, any emoluments of the claimant’s spouse or civil partner deemed to be income of the claimant by that section for the purposes referred to in that section) the claimant shall be entitled to a tax credit (to be known as the “employee tax credit”) of-

(a) where the emoluments (but not including, in the case where the claimant is a married person or a civil partner so assessed, the emoluments, if any, of the claimant’s spouse or civil partner) arise to the claimant, the lesser of an amount equal to the appropriate percentage of the emoluments and €1,650, and

(b) where, in a case where the claimant is a married person or a civil partner so assessed, the emoluments arise to the claimant’s spouse or civil partner, the lesser of an amount equal to the appropriate percentage of the emoluments and €1,650.

(5) Where a tax credit is due under this section by virtue of subsection (2), it shall be given by means of repayment of tax.