TAX ON OVERTIME RULES

TAX ON OVERTIME

SUBSIDIARY LEGISLATION 123.200

TAX ON OVERTIME RULES

16th June, 2020

LEGAL NOTICE 245 of 2020, as amended by Legal Notice 68 of

2022.

The title of these rules is the Tax on Overtime Rules.

In these rules, unless the context otherwise requires

"the Act" means the Income Tax Act;

"basic weekly wage" means the basic weekly wage or the

weekly equivalent of the basic monthly salary as determined for the

purpose of calculating the rate of class one contributions payable by an

employed person in terms of the Tenth Schedule to the Social Security

Act;

"full-time employment" means a full-time employment

registered as such with Jobsplus established under the Employment

and Training Services Act;

"managerial post" means a post of employment of a person who

is a director of the company or a partner of the partnership with which

he is employed or who is an officer with managerial functions;

"overtime" means hours of work performed by an individual in

the course of a full time employment in excess of his normally

scheduled working hours and for which he is entitled to remuneration

over and above his basic weekly wage;

"qualifying overtime" means overtime performed in the course

of a full time employment during a period while -

(a)

the rate of basic weekly wage for that employment

does not exceed three hundred and seventy-five euro (€375) per

week; and

(b)

the post in which that individual is engaged in

terms of the said full time employment is not a managerial post;

"qualifying overtime income" means income derived on

or after 1 January 2020 as remuneration for the performance of

qualifying overtime but subject to the limitations provided for

in rule 3.

The provisions of article 90B of the Act shall apply to

qualifying overtime income derived by an individual in the year

immediately preceding the year of assessment up to an amount not

exceeding -

TAX ON OVERTIME

maxhours x maxrate

where:-

maxhours is the number of hours of qualifying overtime in

respect of which the individual has derived qualifying overtime

income in the year immediately preceding that year of assessment but

not exceeding one hundred (100); and

maxrate is the rate per hour at which remuneration is paid to

that individual for overtime performed by him but not exceeding twice

the hourly equivalent of the basic weekly wage: and for this purpose,

the hourly equivalent of the basic weekly wage shall be calculated by

dividing the basic weekly wage paid to that individual for the period

during which the qualifying overtime in question is performed by forty

(40)

Provided that with effect from the year of assessment 2023, the

said provisions of article 90B of the Act shall apply to qualifying

overtime income derived by an individual in the year immediately

preceding the year of assessment up to an amount not exceeding

(a)

ten thousand euro (€10,000); and

(b)

the amount resulting when the actual number of

hours is multiplied by maxrate, where "the actual

number of hours" means the actual number of hours

of qualifying overtime in respect of which the

individual has derived qualifying overtime income

and "maxrate" is the rate defined above.

(1)

Notwithstanding rule 3, an individual may elect to

have his overtime income excluded from the scope of article 90B of

the Act.

(2)

An election referred to in sub-rule (1) shall be made in

accordance with the provisions of the Final Settlement System Rules

(FSS).

In the case of a married couple, article 90B of the Act

and these rules shall be applied separately to the income derived from

overtime performed by each of the spouses.