John Paul O'Shea (Cork North-West, Fine Gael)
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464. To ask the Minister for Finance the amount of taxation revenue generated and projected per annum following recent changes by the Office of the Revenue Commissioners in relation to the treatment of minor transactions for sporting activities such as coaching, refereeing, summer camps, high-performance training and other such activity that enriches sporting life in Ireland; if the amount justifies the current bureaucratic difficulties being faced within the sports sector by clubs and governing bodies having to factor taxation into the aforementioned activities; and if he will make a statement on the matter. [23465/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that there has been no change in the legislation or in Revenue’s treatment of payments made to individuals by sporting bodies, clubs, etc., where those individuals provide services as coaches, referees, or who work at summer camps, etc.

For the many individuals who volunteer at sports clubs and bodies around the country, there are no tax implications, as volunteers do not receive remuneration for the volunteer services they provide. Where payments of expenses, up to the civil service rates, are made to such individuals, solely to reimburse them for expenses incurred (such as travel expenses), to allow them to undertake their work for a sports club, whose functions and aims are both altruistic and non-commercial, such payments can be made tax free to individuals and would not be considered income for tax purposes in the hands of the individual.

Guidance in regard to travel and subsistence, including the Civil Service rates is available in Tax and Duty Manual Part 05-01-06 – Tax treatment of the reimbursement of Expenses of Travel and Subsistence to Office Holders and Employees www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-06.pdf.

Revenue also advises that where individuals receive, in addition to a reimbursement of actual expenses of travel and subsistence, any remuneration in exchange for the provision of work, such payments do not fall within the description of carrying out work on a voluntary and unpaid basis and are subject to tax in the normal way in accordance with the relevant legislation.

Under the Revenue self-assessment system, each sports club making payments to individuals in this context needs to correctly determine whether individuals are employed or self-employed based on the facts and circumstances of each relationship and payment.

In relation to determining whether an individual is an employee or self-employed, the October 2023 Supreme Court judgement in Revenue Commissioners v. Karshan (Midlands) Ltd. t/a Domino’s Pizza (the Karshan case) sets out the key factors to be considered when classifying an individual’s employment status for Irish income tax purposes. The judgment provides an extensive review of relevant case law, 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).

Revenue has further advised me that it is for the sports club making the payment to an individual to apply the five-step framework to the specific facts and circumstances of the engagement and make a determination on whether the individual is an employee or self-employed. Guidance in regard to the five-step framework as set out by the Supreme Court and that can assist businesses and organisations is available in TDM 05-01-30 – Revenue Guidelines for Determining Employment Status for Taxation purposes www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-30.pdf.

Finally, Revenue advises that:

• Where a sports club makes payments to an individual and determines in accordance with the five -step framework that the individual is an employee for tax purposes, the club is required to register with Revenue as an employer and deduct the appropriate income tax, USC and PRSI from payments to employees through the PAYE system and make the payment of same to Revenue.
• Where a sports club makes a payment to an individual and determines in accordance with the framework that the individual is not an employee, the payment can be made without the deduction of tax, USC and PRSI. If the individual is Irish tax resident, he or she will be subject to Income Tax on their worldwide income, including any income paid by sports clubs, etc. The individual will be required to file an Income Tax Return.
• Individuals who are in receipt of income from sporting bodies, clubs, etc., will, generally speaking, be entitled to some tax credits. For example, the Earned Income Tax Credit (if the income is taxed under self-employment) or the Employee Tax Credit (if the income is taxed as employment income) and the Personal Tax Credit in either scenario.
• If the income from a sports club is low relative to an individual’s tax credits and is their sole income for a tax year, then by virtue of the suite of tax credits available to them, an Income Tax liability for that year may not arise.
• If the individual’s Income Tax liability exceeds the individual’s tax credits, tax will be withheld under the PAYE system or will be due to be paid by the individual by filing a self-assessed tax return.