The Revenue Commissioners have just given fresh guidance on the tax treatment of travel and related expenses to Non-Executive Directors when they are attending board meetings. The Commissioners have decided that travel to a board meeting is similar to travelling to your place of work, for which a person does not get any expenses. It’s deemed to be ‘preparatory for the performance of the duties of work rather than being incurred in their actual performance’.
Most limited companies have non-executive directors and as the obligations on those directors get more onerous finding people to serve on a company board, often pro-bono in a company’s early years, the idea that the modest travel expenses they might be paid to directors are to be subject to tax is going to make finding good directors even more difficult.
Director’s fees and emoluments (as auditors like to call them) are classed as income and are therefore subject to the normal tax laws. But a tax on legitimate travel expenses for a director is a tax on good governance (it is the law that stipulates the minimum number of directors – and historically that has been to ensure proper oversight of a business). It is also an attack on attracting top quality advisors at board level to a business. Without a doubt more potential directors will be of a mind, when they see that they’re being taxed to go to board meetings, to say ‘I couldn’t be bothered’.
The Revenue Commissioners do not give any context as to why they have changed their position, whether they have found some form of abuse going on, but at ISME it’s clear to our members that this change does not help make Ireland ‘the best little country in which to do business’.
