A number of Revenue Guidance Documents have been introduced following Finance Act 2014 being signed into law on 23^rd December 2014.

2. Deduction for Income Earned in Certain Foreign States (Foreign Earnings Deduction) – eBrief no. 106/14 (24th December 2014)

The Foreign Earnings Deduction (F.E.D.) was introduced in Finance Act 2012.

It was designed to encourage and incentivize individuals who perform their duties of employment in the specific countries Ireland was targeting for the purposes of business development and export growth.

In 2012 this tax relief applied to Irish resident employees who carried out significant duties in Brazil, Russia, Indian, China and South Africa.

From 2013 to 2014 the list of countries was extended to Egypt, Algeria, Senegal, Tanzania, Kenya, Nigeria, Ghana and the Democratic Republic of Congo.

According to this eBrief the number of relevant states now include: Japan, Singapore, South Korea, Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico and Malaysia.

Prior to Finance Act 2014 the rules for claiming the relief were as follows:

1. The individual was required to exercise the duties of his/her employment for at least sixty days in the above mentioned countries i.e. those listed from 2012 to 2014.
2. Each visit must consist of four days to be considered for F.E.D. Relief.
3. The formula to determine the deduction was as follows:

Employment Income x Qualifying Days
Total Days

4. The deduction was capped at €35,000.
5. “Qualifying Days” related to days carrying out the duties of employment and did not include days travelling.

Finance Act 2014 introduced the following changes for the years 2015, 2016 and 2017:

1. The required number of qualifying days abroad dropped from sixty to forty days.
2. The length of time spent working abroad was reduced from four days to three days.
3. The time spent travelling from Ireland to a relevant state or from a relevant state to Ireland or to another relevant state is deemed to be a “Qualifying Day.”

By “Qualifying Day” we mean a day, the whole of which is spent in a relevant state for the purposes of carrying out the duties of an office or employment.

Other Points to Consider:

1. Employment Income includes stock options but excludes pension contributions, tax deductible expense payments, benefits-in-kind, termination payments, etc.
2. There is no tax relief from PRSI.
3. There is no tax relief from Universal Social Charge.
4. The relief does not apply to those working in the civil and public services.
5. The Relief is not available in respect of income from an office or employment which is chargeable on the remittance basis.
6. The Relief is not available in respect of income which qualifies for:

a) Section 472D – Research and Development Credit
b) Section 825C – Special Assignee Relief Programme
c) Section 822 – Split Year Residence Relief
d) Section 825A – Relief for Income Earned outside the State.

Next: Part III – 3. Guidance on Compensation Payments under Section 2B of Employment Permits Act 2003 – eBrief no. 112/14 (24th December 2014)