(Pic: RollingNews.ie)
Revenue says that it is giving employers a chance to correct tax issues from 2024 and 2025 arising from what it describes as “bona fide classification errors”.
The tax body’s move comes after the Supreme Court judgment in Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza, which introduced a five-step framework to be applied when determining if a worker is an employee or self-employed for income-tax purposes.
Revenue is encouraging employers who may have misclassified employees as contractors, due to a reliance on the case law and guidance available before the Karshan judgment, to take the opportunity to regularise their tax affairs without interest and penalties.
The tax body has previously encouraged all businesses engaging contractors, sub-contractors, or other workers on a self-employment basis to familiarise themselves with the detail of the judgment and review their workforce model.
It has published guidance aimed at helping employers to calculate any adjustment needed. Employers have until 30 January 2026 to submit disclosures.
EY Ireland tax partner Sandra Brennan described the update as “significant” for any business engaging self-employed contractors in Ireland.
“Employers who act now can benefit from significantly reduced settlement terms, including a flat 20% income tax rate and 3.5% USC – a marked departure from standard treatment,” she stated.
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