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A great way for businesses to pay a bonus at Christmas is through the Small Benefit Exemption Scheme.


Tax Free Bonus

To pay an employee a bonus of €1000 through payroll, it would cost an employer €2,082 (For an employee who is earning €45,000 to receive a final net bonus of €1000, an employer would need to pay approximately €1,875 gross, plus incur an additional cost of €207.17 based on 11.05% Employers PRSI.)

However, under the Small Benefit Exemption Scheme businesses can give employees, including directors, up to €1000 a year completely tax-free.


Changes to the Small Benefit Exemption Scheme

Previously the total amount an employer could give tax-free under the Small Benefit Exemption Scheme was €500. Budget 2023 announced that this limit has increased to €1000, however there is no obligation to give the full amount. 


How can I pay the bonus?

This bonus must be in the form of a voucher which can only be redeemed in exchange for goods and services i.e. it cannot be exchanged for cash. 

Previously an employer could only give 1 voucher in a year, but this has now been changed that 2 vouchers can be given in a year.

The most widely known method of availing of this scheme is through the One4all Gift Cards.


Reporting payments made under the Small Benefit Exemption Scheme

If you plan to give staff any vouchers after 01 January 2024 you will be required to report the details to Revenue through Enhanced Reporting Requirements (ERR). Read more about ERR here


Date published 15 Dec 2021 | Last updated 13 Dec 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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