Employment tax
Employment tax planning
Due to changing employment trends and high employment tax costs we find that we are increasingly advising clients on complex employment related matters.
Settlements / termination payments
We have extensive experience in advising both employers and employees on the tax issues arising on the cessation of employment. In particular, we provide bespoke advice on structuring severance packages for departing employees in a tax-efficient manner. Additionally, we regularly liaise with Revenue to seek advance approval for tax-free payments in contentious employment matters.
The most common theme that we find in relation to advising in this area is that tax advice tends to be an afterthought, and sometimes it can be all too late if documents have already been signed. The wording of the documentation is key to a tax efficient payment. This is relevant whether it is a termination payment, redundancy payment, settlement payment or compromise agreement.
Common errors that often occur relate to the application of PRSI (or not as the case may be) to different elements of the payment.
The word of warning for anyone who receives a termination proposal or finds themselves involved in a compromise agreement is to seek tax advice in advance of signing any paperwork. This can save a lot of time and tax!
Shares from employees
We frequently advise on tax efficient ways of involving employees in companies.
In the current competitive employment market, employers are increasingly looking for methods to retain key talent and reward employees. Certain Revenue guidance confirms generous discounts for valuing shares in private companies which give plenty of opportunities to involve employees in a company at a low tax cost.
Trading companies may be able to give shares to employees at a low discounted value prior to a take-over. The employees could then potentially receive cash on the sale of the company in a tax efficient manner.
In other cases, where no sale is on the horizon trading companies can often leverage low valuations and discounts to incentivise employees by providing them with shares in the company at a low tax cost. This can also include a protection mechanism that passes the shares back to the company if an employee leaves within a fixed number of years.
Growth shares, that allow employees participate in the future growth in the value of a company are another way of providing shares to employees tax efficiently.
Additionally, KTA Tax advises on the Key Employee Engagement Programme (“KEEP”) Share Option Scheme, which can facilitate companies involving employees in share ownership at no tax cost initially with the value received subject to more favourable CGT rates on a future sale of the shares.
Executive payroll services
We offer a comprehensive specialist payroll service to tie in with our specialised expatriate tax services.
This includes handling all necessary tax registrations, assisting with PPS number applications, and managing any internal audit procedures required by companies. We ensure that all internal controls are adhered to, particularly in relation to banking, new employees, payroll processing procedures and systematic updates.
For outbound employees, we assist with tax refunds and issues related to split-year residence.
The highly mobile nature of some executive roles requires in-depth knowledge of the Irish tax rules and familiarity with cross-border social insurance issues, all of which KTA Tax is experienced in.