Directors who own more than 15% of the ordinary share capital of a company (i.e. Proprietary Directors) are required to file an income tax return via Revenue’s Online Service (ROS) for every year that they continue to hold the directorship. This is still the case even if the director only earns PAYE income through a separate employment(s).
These income tax returns will require the disclosure of payments made by the company to the directors during the year in question, as well as expenses incurred for the benefit of the directors. Any income earned from other sources must also be disclosed, including foreign income, depending on the residency status of the director in question.
Strong penalties exist for proprietary directors who do not file their tax return on time. Revenue can impose a 5 or 10% surcharge on the income tax paid via the PAYE system (deducted via payroll) even though all the relevant liabilities have been deducted at source. Therefore, it is very important that proprietary directors ensure their filing obligations are made on time.
Exemptions from the obligation to file returns are available for certain directors of shelf companies, directors of genuinely dormant companies and others who take up temporary directorships in the period prior to a company commencing activity. The timing of commencement activities is a matter of fact and each case should be looked at on it’s own merits.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact us on 083 087 5936 or info@phairandco.ie.
