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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Ireland: Pension contributions

With effect from 6 April 1994, an employee who is a member of an approved UK pension scheme and who goes to work in Ireland either for his UK employer or an associated employer, may, subject to certain conditions, qualify for tax relief in Ireland in respect of his contributions to the UK pension scheme (Article 17A(1)(a)). In these circumstances the employer’s contributions to the scheme are allowable as a deduction in computing the employer’s profits in Ireland and should not be treated as part of the employee’s taxable income, for example, as a benefit in kind (Article 17A(1)(6)).

The provision is phrased reciprocally and so will also apply where an employee comes from Ireland to the UK and continues to contribute to an approved pension scheme established in Ireland. To qualify for relief all of the following conditions must be satisfied

a) the employee must be employed in the UK by the same employer he was with before entering the UK, or by an employer in the same group. An employer is in the group if, directly or indirectly, one is controlled by the other or both are controlled by a third person. `Control’ in relation to a body corporate is to be construed as

i) where the body corporate is a close company in accordance with ICTA88/S416 or  

ii) where it is not a close company, in accordance with ICTA88/S840  

b) the employee must not have been resident in the UK immediately before taking up employment in the UK;

c) at the time the contributions to the scheme are paid, the employee should have exercised his employment in the UK for

i) (less than 10 years if he was resident in Ireland immediately before entering the UK, or  

ii) less than 5 years in other circumstances; and  

d) the scheme is approved or registered for approval in Ireland (copies of correspondence issued by the Irish Revenue should be obtained in order to establish whether this criterion is satisfied).

Upon the making of a claim it is important to ascertain the full facts. If (a), (b) and (c) above are satisfied but (d) is not the correspondence should be referred to the Pension Schemes Office. In all other cases the validity of the claim should be determined in the District.