Written answers

Wednesday, 18 September 2013

Department of Finance

Universal Social Charge Payments

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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136. To ask the Minister for Finance if he will outline the way a person who is employed by their own company and is then contracted out by this company to another company for a service pays the universal social charge since it it their company that is being paid for the work and not the person; and if he will make a statement on the matter. [37685/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The position is that the Universal Social Charge (USC) is a charge on the gross income of individuals if their gross income exceeds the USC threshold of €10,036 per annum. I assume that the Deputy is referring to the circumstances applicable to an individual who is a director of his or her own company. Such an individual is subject to tax under Schedule E on his or her salary from the company under the PAYE system. Income that is subject to the PAYE system constitutes relevant emoluments for the purposes of USC.

Where the services of the individual are being contracted out by his or her company to another company or business, and payment for those services is made by the second company or business to the individual’s own company, such payment is not subject to USC. An assumption underlying the situation referred to above is that the individual is not an employee of the company or business to which he is contracted. While this may be true in the generality of cases, it cannot be automatically assumed. The facts of each case will determine whether there is an implied contract of employment between the individual and the other company or business. Should it be determined that there is such a contract then any payment made would be subject to USC.

Photo of Dominic HanniganDominic Hannigan (Meath East, Labour)
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137. To ask the Minister for Finance if he will outline exactly on what income the universal social charge is payable; if persons from outside the State who are paid a fee to work here are liable for same; and if he will make a statement on the matter. [37686/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Universal Social Charge (USC) is a charge on the gross income of individuals if their gross income exceeds the USC threshold of €10,036 per annum. It applies to gross income before deduction for the various tax incentives or reliefs such as pension contributions. In addition, it also applies to income sources that are exempt from income tax such as income of certain artists or income from woodlands. However, allowance is made for the deduction of normal expenses associated with a trade, including normal capital allowances.

There are some types of income which are not chargeable to USC, such as social welfare payments and other similar payments made by bodies such as the Health Service Executive. Those in receipt of such income are only liable to the USC to the extent that they have income from other sources which exceeds €10,036 per annum. Furthermore, persons resident in Ireland are liable to USC on their world-wide income. Persons who are not resident in Ireland are liable to USC on income arising here. Such persons may obtain double taxation relief in their country of residence in respect of USC paid. Full details regarding the USC including the sources of income which are exempt from the charge can be obtained on the Revenue Commissioners website at .

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