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Tax

Tax relief on employer contributions

Employers get tax relief on contributions they make to a pension arrangement. The treatment of employer contributions for tax purposes depends on the type of arrangement you may have.

Employer contributions to pension arrangements are fully deductible for corporation tax purposes up to certain limits.

Contributions paid by employers to occupational pension schemes are not treated as a benefit-in-kind and can be paid in addition to the contribution limits for employee contributions.

Contributions paid by employers to PRSAs are treated as a benefit-in-kind but income tax relief is provided subject to the overall contribution limits for employee contributions.  Employer contributions to PRSAs are not subject to PRSI or the Universal Social Charge (USC).

Example

Louise pays tax at 40% and contributes €200 per month to an occupational pension scheme, which is matched by her employer.  The net cost of a total pension contribution of €400 per month is just €120.

 

 Monthly ContributionBenefit in KindTax ReliefNet Cost
Employer€200€0€0€0
Employee€200€0€80€120
Total€400  €120