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Understanding the Small Benefit Exemption: A Simple Guide for Startups

Hey there, entrepreneurial friends! We’ve got some good news on the tax front, thanks to the recent budget announcements. Here’s the lowdown on the Small Benefit Exemption that’s making a bit of a buzz.

Reward Your Team, Tax-Free!

Ever thought of giving a little extra something to your stellar team without the tax headache? Well, now you can! As of the latest budget changes on September 27, 2022, you can gift your employees, including company directors, up to €1,000 in non-cash rewards each year—completely on the tax-free side. It’s the perfect way to say “thanks” for a job well done, especially when the festive season rolls around. Think gift vouchers, like one4all — they’re a hit!

The Must-Knows of the Small Benefit Exemption:

Don’t get caught off guard! There are a few key points to keep in mind to ensure you reap the full benefits without a tax hiccup:

  • The cap’s at €1,000: Each benefit must stay within this sweet spot.
  • Limit of two: You can only dish out two tax-free benefits or vouchers per year. Hand out any more, and only the first two will dodge the tax bullet. No rollovers allowed, so use it or lose it.
  • Goods and services only: This isn’t for cash or anything that smells like it (say goodbye to those ATM-friendly cards).
  • No salary trade-offs: These perks shouldn’t be part of any deal where your employee gives up part of their salary in exchange.
  • Employer-purchased: Make sure the company’s the one buying the voucher, not the employee.

Say you’ve already given a €500 voucher tax-free in 2022, you’re all set to give out another €500 before the year’s up to max out the €1,000 benefit.

Savings? Yes, Please!

We’re talking about saving up to €1,313 for your employees or €1,083 for proprietary directors in taxes. That’s a nice chunk of change staying right where it should—in your people’s pockets.

Keeping It Casual with Compliance:

While you don’t need to apply to get this exemption, don’t toss out the paperwork. Keep a record of all the voucher purchases and the beneficiaries. The cool part? You don’t have to report these goodies to the Revenue Commissioners. It’s hassle-free!

Embrace the Small Benefit Exemption, and give a little back to those powering your startup’s success. After all, happy teams make for thriving businesses!

PLEASE NOTE: From 2024 as part of the new Enhanced Revenue Reporting, The Small Benefit Exemption payment needs to be reported to the Revenue Commissioner. You must submit details of the date paid and the value of this benefit.

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