Professionals in a taxing environment

This sets out the arrangements for refund of PRSI paid on certain share-based remuneration.   These arrangements may also be availed of in respect of PRSI incorrectly deducted and remitted in the 2011 tax year, on employer contributions to their employees’ Personal Retirement Savings Accounts (PRSAs).

SHARE-BASED REMUNERATION – EMPLOYER PRSI

As set out in the Minister for Social Protection’s statement of 23 August 2011, employers should cease deducting and remitting employer PRSI on share-based remuneration with immediate effect.   Where employer PRSI on share-based remuneration has been deducted and remitted since 1 January 2011, a refund of PRSI may now be due.

SHARE BASED-REMUNERATION – EMPLOYEE PRSI

On 18 March 2011 the Minister for Finance announced that the charge to PRSI (both employer and employee) will not apply where the share-based remuneration was the subject of a written agreement, entered into between the employer and the employee before 1 January 2011. Therefore, employee PRSI paid on such share-based remuneration may be refunded.    It should be noted that the Minister for Finance has indicated that the charge of employee PRSI will apply to all share-based remuneration from the 2012 tax year regardless of when agreements were entered into (with the exception of shares already held in an Employee Share Ownership Trust before 1 January 2011).
The appropriate legislative changes will be included in the next Social Welfare Bill.

PERSONAL RETIREMENT SAVINGS ACCOUNTS (PRSAs)

An employer's contribution to an employee's PRSA is not subject to PRSI. Clarification on the income tax, PRSI and universal social charge treatment of such contributions can be found in Revenue ebrief no. 36/11 published on 24 June 2011 at http://nt1/exchweb/bin/redir.asp?URL=http://www.revenue.ie/.   Where PRSI has been incorrectly deducted and remitted in the 2011 tax year a refund of such PRSI may be due.
To facilitate the refund of PRSI within the 2011 tax year, it has been agreed with the Office of the Revenue Commissioners that employers can offset PRSI to be refunded against current PRSI liability through the monthly P30 /end of year P35 returns.

REFUND VIA P30/P35 RETURN TO REVENUE COMMISSIONERS

As the amount of PRSI chargeable is assessed on a weekly non-cumulative basis, the calculation of the amount of any refund should be made on a week-by-week basis. 

P30 Return

PRSI is generally remitted with the form P30 to the Collector-General within 14 days of the end of the income tax month (or 23 days in the case of returns made through ROS) during which the deductions were made.  Some employers may be authorised to make quarterly returns.
The total PRSI refund calculated should be deducted from the next monthly/quarterly P30 remittance of PRSI to be paid to the Collector-General and recording of the PRSI on the P30 should be reduced accordingly.  Where the amount of the PRSI refund exceeds the amount of the monthly/quarterly PRSI liability to be remitted with the P30, a "nil" return for PRSI on the P30 should be recorded for that particular month/quarterly period.   The excess of the PRSI refund not already offset against the PRSI liability in the first month/quarterly period may be offset in P30 returns for subsequent tax months/quarterly periods within the 2011 tax year.

P35 Return

Any excess of PRSI not recovered by adjustment to P30s before the end of 2011 can be claimed on the P35 return submitted at the end of the year.  Please note that any such refund arising must be claimed at the appropriate section of the P35 return.
Under no circumstances should a refund of PRSI be recovered from income tax or universal social charge liabilities.  Such liabilities should at all times be recorded separately from the PRSI contributions.
Employers should retain records showing how any refund was calculated for the usual 6-year period from the end of the tax year to which they relate.
Employers must also ensure that the correct PRSI class continues to be recorded for each employee, even though a “nil” or reduced PRSI liability is recorded on the monthly P30 submitted to the Collector General for the purposes of securing the refund of PRSI (and on the end of year P35 submitted in due course).
Employers can avail of the mechanisms outlined above to obtain a refund in all cases other than the circumstances listed in the Paragraph 3.

EXCLUSIONS FROM P30/P35 REFUND ARRANGEMENTS

The refund mechanism outlined in paragraph 2 above may not be used in the following circumstances:

• Employer/employee PRSI paid prior to 2011
• In respect of employees who are no longer employed by the employer
• In respect of current employees whose employment in the period from 1 January 2011 to date has been interrupted for any period whatsoever.
• In respect of employees whose income for the purposes of charging PRSI is less than €38 in any particular week from 1 January 2011 to date.  This includes employees whose income for PRSI purposes was less than €38(see note below) for even one week of insurable employment during the period in question.

(Note: For those paid fortnightly or monthly the relevant figure is €76 and €165 respectively, provided the total earnings in each week of the fortnight or month are at least €38.)
Applications for refunds of PRSI in these circumstances must be made directly to the Department of Social Protection at:
PRSI Refunds Section
Department of Social Protection
Oisin House
212-213 Pearse Street
Dublin 2.
Applications for refunds cannot be made earlier than the last day of the contribution year in respect of which the contributions were made.