Mairéad Farrell (Galway West, Sinn Fein)
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583. To ask the Minister for Finance the legal status of postmasters as employees that was recently confirmed by both the scope section and the social welfare appeals office in an individual case (details supplied); and if the Revenue Commissioners will review their contractor agreement with An Post in light of the Supreme Court decision in Karshan. [19481/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware, on 20 October 2023, the Supreme Court (in a unanimous decision) delivered a detailed judgment in The Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza. The case was concerned with whether the delivery drivers were independent contractors under a “contract for service” and taxable under Schedule D of the Taxes Consolidation Act 1997, or employees under a “contract of service”, and taxable under Schedule E of that Act (PAYE). It is important to note that the case was concerned solely with the proper tax treatment of the workers concerned and so did not concern the PRSI class of said workers.

The judgment provides an extensive review of relevant caselaw, and succinctly summarises it through the provision of a five-step decision-making framework. The decision-making framework consists of five questions that are to be used to resolve the question of whether a contract is one of service (employee) or for service (self-employed).

Following on from the Karshan ruling, as was previously the case, it is for a business who engages a person to make the determination whether the individual is employed or self-employed for tax purposes based on the facts and circumstances of each relationship and payment. It is not a matter of choice, either for the business, the individual or Revenue.

To assist businesses who engage individuals to carry out work, Revenue developed a detailed Tax and Duty Manual (TDM) which outlines its position in relation to the application of the judgment. The TDM (Part 05-01-30) was published in May 2024 and is available on the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-30.pdf.

Furthermore, in November 2024, Revenue, the Department of Social Protection (DSP) and the Workplace Relations Commission (WRC) published an updated Code of Practice on Determining Employment Status (“the Joint Code”) following the judgment. The Joint Code is available at: .

As outlined in the Joint Code, Revenue has responsibility for employment status solely as it relates to tax, whereas DSP determines employment status with a view to deciding the appropriate class of PRSI for an individual and the adjudication service of the WRC determines employment status as a preliminary issue when adjudicating on employment rights complaints. Each of these State bodies operates within its own legislative framework and decisions of Revenue, DSP and the WRC are not binding on each other. While Revenue endeavours to ensure consistency, occasionally, due to the separate legislative frameworks, differences arise.

For example, I am advised by DSP that there has been an agreement since 1979 between DSP, An Post and the Post Master’s Union that postmasters be insured at PRSI Class A. However, for tax purposes it is recognised that running a post office is akin to other self-employed ventures (i.e., postmasters have to maintain a premises, pay insurance, may have to hire additional counter staff, etc.). In practical terms, this sees An Post remit postmaster’s PRSI directly to DSP, while the postmasters themselves files annual returns of income (profits) to Revenue for the collection of taxes.

The tax treatment of postmaster income is clarified in Revenue’s guidance in TDM 04-01-19, which states that, for income tax purposes, the income arising to Sub-Postmasters in their capacities as Sub-Postmasters is taxed as self-employment income and charged under Case I of Schedule D. This position is based on caselaw that pre-dates the Karshan ruling. In addition, the TDM advises that queries as they relate to PRSI should be referred to DSP. The TDM is available on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-19.pdf.

I am advised by Revenue that the TDM relating to Sub-Postmasters & Social Welfare Branch Managers will be updated shortly to confirm that the tax treatment of these individuals must be determined in line with the five-step framework as set out in the Karshan case.

However, it should be noted that it remains the case that any queries as they relate to PRSI or an agreement between DSP, An Post and the Post Master’s Union should be referred to DSP rather than my Department.