New Irish Revenue Tax Guidance on Determining Employment Status

What you need to know:

• In May 2024, the Irish Revenue Commissioners (“Revenue”) published guidance on determining employment status for taxation purposes. The guidance was issued subsequent to the Irish Supreme Court’s judgment in The Revenue Commissioners v Karshan (Midlands) Ltd. t/a Domino’s Pizza [2023] IESC 24 (Karshan).
• The guidance considers the five-step decision-making framework from that case and provides several worked examples. Although the guidance is tax-focused, in our view it will guide tax and employment law analysis in the future.
• Businesses should review their contractual and day to day working arrangements with workers who are not employees – if by applying the five-step test, there is a risk of misclassification, then employers need to consider how best to address historic tax and employment law liabilities and mitigate future tax and employment law risks. Equally, there may be cases where a prospective change in status may be appropriate given the new legal principles set out in the Karshan case.