Employment Status in Ireland: A New Ruling on Contractor v Employee Classification
In a recent determination1 by the Irish Tax Appeals Commission (Ref 94TACD2026) dated 23 June 2026, the Appeal Commissioner (“AC”) rejected an appeal by an independent contractor who claimed he should be correctly classified for tax purposes as an employee.
- Published
- in Analysis & Insights
The AC applied the five Karshan Tests, as set out in the 2023 landmark Irish Supreme Court Karshan judgment which determined that delivery drivers for a Domino’s Pizza franchise were employees, thus setting a “low bar” on the existence of an employment relationship in Ireland (see our earlier podcasts and knowledge updates2).
As a result, the Irish Revenue Commissioners (who were the Respondent) succeeded in this case in defending the accuracy of a number of disputed tax assessments raised previously in respect of the contractor.
The contractor had argued that he was employed under a contract of service with his clients, Company A and Company B.
The contractor had in fact been engaged on a series of written independent contractor arrangements to provide IT services to his clients.
He was engaged directly with the companies and not through any service company. He raised monthly VAT invoices and submitted that he:
- had over a decade of uninterrupted and exclusive service with Company A and Company B;
- provided full-time personal IT services;
- was paid overtime;
- did not use, and was not permitted to use, substitutes to supply the services;
- was under the control of Company A and Company B; and
- was treated as an employee and represented externally as an employee of Company A and Company B.
The AC applied the five Karshan Tests to the evidence and was satisfied on the facts that the working arrangements passed the first three “gating” tests (performing work for remuneration, providing services personally, and control over the worker).
However, in applying the fourth Karshan Test (whether, having regard to the “admissible factual matrix”, the working arrangements were more consistent with a contract of employment), the AC decided that they were not consistent with an employment relationship.
The AC was particularly influenced by the fact that the contractor had established these arrangements to his own economic advantage (in contrast to the workers in other previous cases). He had issued VAT invoices, claimed deductible expenses, was not paid holiday or sick pay and had no pension benefits. This is an interesting and somewhat surprising decision given the Karshan decision and we understand has now been referred to the High Court by the Respondent. We will continue to monitor developments on this important issue.
Please contact the listed contacts to discuss further.
1 Tax Appeals Commission: Determination 94TACD2026.
2 Further information is available on maples.com: Article on 2023 Judgment and Tax & Coffee Podcast
