Services to Irish-based Companies

Tax Tips December 2018

Domestic Employers and Domestic Employees

Certain domestic employers are not required to register as an employer. This is outlined in section 986(6) of the Taxes Consolidation Act 1997. The key aim of this is to reduce the administrative burden on the employer who is an individual. An example of a domestic employee is an Au Pair who is employed by a domestic employer solely on domestic duties.

A qualifying domestic employer is one who:

  1. Is an individual;
  2. Has only one domestic individual who is employed solely on domestic duties in the home;
  3. Pays less than €40 a week to that employee.

Currently, a registration limit applies to all other employers. An employer must register for PAYE/PRSI purposes if they pay:

  • €8 a week or more to an employee who has more than one employment or;
  • €2 a week or more to any other employee.

From the year 2019 onwards, there is no minimum registration limit for all other employers. Employers, other than domestic employers, must register as an employer and deduct Income Tax/USC/PRSI as appropriate under the PAYE system on the making of a payment of emoluments to employees.

Taxation of Domestic Employee

The domestic employee’s income is chargeable to income tax and the universal social charge. This income will also qualify for the PAYE tax credit. It is expected that most domestic employee’s income will be below the universal social charge exemption limit and the tax credits will eliminate any PAYE owing to the Revenue.

In the case of married persons and civil partnerships, where aggregation applies and one spouse’s or civil partner’s only income is from a domestic employment, any tax due should be collected by restriction of the other spouse’s or civil partner’s tax credits.

If the domestic employee has concurrent non-domestic employment, the tax due should be collected by way of restriction of tax credits due against the non-domestic employment.

Where an individual ceases to be employed as a domestic employee and takes up other employment, the figure of pay supplied by that individual in relation to the domestic employment should be accepted for the purposes of issuing a tax credit certificate to the new (non-domestic) employer.