Foreign Earnings Deduction (FED)

The Foreign Earnings Deduction (FED) was reintroduced in 2012 to encourage temporary overseas work in specific countries. This deduction allows eligible employees to reduce their Irish taxable income. The deduction was available for the tax years 2012 to 2022, with a maximum claim of €35,000 per year.

Initially, in 2012, the deduction applied to the BRICS countries: Brazil, Russia, India, China, and South Africa. Subsequent Finance Acts expanded the list, adding:

• Algeria, The Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal, and Tanzania in 2013.
• Japan, Singapore, Korea, Saudi Arabia, the UAE, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico, and Malaysia in 2015.
• Pakistan and Colombia in 2016.

To be eligible for the deduction, employees were required to meet minimum work day requirements.

• Minimum Work Days: 2012-2014: 60 days in a qualifying country. 2015-2016: 40 days. 2017-2022: 30 days.
• Consecutive Work Days: 2012-2014: Qualifying days had to form part of a period of at least four consecutive workdays. 2015-2022: Qualifying days had to form part of a period of at least three consecutive workdays.
• For the years 2015 to 2022, time spent traveling between Ireland and a qualifying country was also considered time spent working in the qualifying country.

It is important to note that the deduction did not apply to:

• Employees paid from public revenue (e.g., civil servants, Gardai, members of the defense forces).
• Individuals employed by statutory bodies.

The deduction was calculated based on the amount of time spent working in the qualifying country. Furthermore, it could not be claimed in conjunction with other tax reliefs, including:

• Split year relief.
• Trans-border Relief.
• The Special Assignee Relief Programme (SARP).
• The R&D Incentive.
• The limited remittance basis.

The deduction was claimed at the end of the tax year when filing the annual income tax return.