The small benefit exemption is a concession which lets employers in Ireland give staff a voucher – but not cash – free of tax.
In Budget 2023, the value of the small benefit exemption was doubled from €500 to €1,000 per year, effective from 2022.
From an employer’s perspective, no employer PRSI applies to the benefit, making it cheaper than the equivalent amount of pay (typically €1,000 rather than €1,111 of cost).
From an employee’s perspective, the benefit is valuable because it is free of PAYE, PRSI and USC. For a top-rate taxpayer on an effective overall rate of 52%, this could mean additional €520 of value.
The main requirement to qualify for the small benefit exemption is that the benefit is not given as cash. Instead, it is usually given as a voucher, or sometimes as a product or service.
