Pearse Doherty (Donegal, Sinn Fein)
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93. To ask the Minister for Finance if he will amend the BIK exemption for employer contributions to PRSAs in light of concerns that it has facilitated aggressive tax planning; and if he will make a statement on the matter. [28566/24]

Jack Chambers (Dublin West, Fianna Fail)
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Finance Act 2022 removed the difference in treatment of PRSAs and occupational pension schemes for funding purposes, by abolishing the BIK charge on employer contributions to an employee’s PRSA, and not counting employer contributions to an employee’s PRSA towards that employee’s age related and salary percentage limits on tax deductible contributions. Prior to the amendment, the contributions were relieved from tax where the combined contributions by an employer and an employee to a PRSA did not exceed the employee’s annual percentage limit (between 15% and 40% of “net relevant earnings”, varying depending on age, up to a maximum relieved salary of €115,000). However, where the combined contributions exceeded the applicable threshold, the amount above the threshold was treated as a taxable benefit in kind (BIK) in the hands of the employee.

The change in approach for PRSAs was recommended by the Interdepartmental Pension Reform and Taxation Group (IDPRTG) with a view to improving and simplifying the pension landscape in Ireland.

In relation to tax planning, I am informed by Revenue that there is a continuous focus on compliance across pensions, identifying and confronting non-compliant behaviour across schemes. This is in line with the commitment in Revenue’s Corporate Priorities 2024 to comprehensively use the full suite of interventions set out in its Compliance Intervention Framework to assist voluntary compliance and to provide an appropriate response to non-compliance.

As with the introduction of any new provision, Revenue monitors trends and conducts analysis based on actual data to ensure the measure is operating as intended. Revenue engages with my Department in supporting the development of tax policy and associated legislation and, where appropriate, will draw my Department’s attention to matters arising in the operation of the tax system.

The first year where the new rules came into effect was 2023. Revenue’s analysis of data relating to employer PRSA contributions in 2023 has highlighted certain practices which require further examination and it is carrying out an additional review of these cases.

Revenue have recently submitted a paper to my Department outlining findings and concerns regarding how the provisions are operating, which my officials are currently considering. Revenue continues to review data and compliance in this area and will continue to liaise with my Department in that regard.