Generally, where an employer provides a voucher or other incentive to an employee it is chargeable to Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC).
The small benefit exemption provides that a voucher or incentive may be given to an employee without giving rise to a charge to tax provided certain conditions are met.
The voucher or tangible non-cash benefit must also meet all of the following conditions in order to be a qualifying incentive:
- The voucher or benefit cannot be part of any salary sacrifice arrangement between the employee and employer.
- The voucher or benefit can only be used to purchase goods or services and cannot be exchanged in part or in full for cash.
- The voucher or benefit cannot exceed €500 in value.
- Only one voucher or benefit may be given in any one tax year.
Where all of the above conditions are met the voucher or benefit will be a qualifying incentive and will be eligible for the small benefit exemption, meaning no tax is payable on the receipt of the voucher or benefit by the employee.
