Who qualifies for FED?

In order to qualify for Foreign Earnings Deduction (FED), you are required to work in a relevant state for at least:

• 60 qualifying days in 2012, 2013 and 2014
• 40 qualifying days in 2015 and 2016
• 30 qualifying days in 2017 to 2025

You are required to work the number of qualifying days during a tax year or during a continuous 12-month period spanning two tax years.

The qualifying states include Brazil, Russia, India, China and South Africa.

In addition to these states, Revenue has since added more.

This means that at present, FED covers income earned in the relevant states mentioned above, as well as: Egypt, Algeria, Senegal, Tanzania, Kenya, Nigeria, Ghana, Democratic Republic of the Congo, Japan, Singapore, Republic of Korea, Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Malaysia, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico, Colombia, and Pakistan.

What are qualifying days?

From 2012 to 2014, a qualifying day is one of at least four consecutive days worked in a relevant state. The day of arrival in, and the day of departure from that state, cannot be counted.

From 2015 to 2025, a qualifying day is one of at least three consecutive days worked in a relevant state. The time you spend travelling may be included within a qualifying day if you travel either:

• from Ireland to a relevant state
• from a relevant state to Ireland
• from one relevant state to another

You can count Saturdays, Sundays and public holidays as qualifying days in a relevant state.

There are certain times when your claim for FED will be automatically refused if you fall into certain categories.

How much allowance can you claim?

The amount of the allowance due is the lesser of €35,000 or the specified amount.

The specified amount is calculated using (D × E) ÷ F.

• D is the number of qualifying days worked in a relevant state during the tax year or during a continuous 12-month period spanning two tax years.
• E is all the income received from the employment in the tax year or during a continuous 12-month period spanning two tax years. This includes any taxable gain realised by share options less any qualifying pension contribution or premium. It excludes allowable expenses payments, Benefits in Kind (BIK), termination and restrictive covenants payments.
• F is the total number of days that the employment is held by you in the tax year (there are 365 days in a full tax year).

The specified amount is reduced by your income earned on qualifying days for which Double Taxation Relief is available under a tax treaty.

How do you apply for FED?

The amount of any deduction will depend on the number of qualifying days absence in either a tax year or a period of 12 months spanning two tax years. The deduction is claimed after the end of the tax year. You must apply in writing to your Revenue office and include a statement from your employer that contains details of:

• the dates of departure and return to Ireland
• the location or locations where you worked while abroad.

You must claim within four years.

Please let us know if you would like to arrange a call to discuss the Foreign Earnings Deduction tax Relief further.