What is the Small Benefit Exemption in Ireland — how much can an employer give tax-free?

The Small Benefit Exemption allows Irish employers to give employees non-cash benefits or vouchers up to a certain limit each year without the benefit being subject to PAYE, PRSI, or USC.

2024 Small Benefit Exemption limits (Budget 2024):

From Budget 2024, the exemption was increased significantly:

• Employers can give up to two tax-free non-cash benefits per year to each employee
• The first benefit can be up to €1,000 (increased from €500 in prior years)
• A second benefit can be up to €500
• The combined annual maximum is €1,500 per employee per year (up from €1,000 previously)

If the benefit exceeds these limits, the entire excess becomes liable to BIK, PAYE, PRSI, and USC — not just the portion over the limit.

What counts as a qualifying benefit?

• Vouchers (retail, restaurant, experience)
• Non-cash gifts (physical goods)
• Must be non-cash — direct cash payments, bank transfers, or cheques do not qualify

What does NOT qualify:

• Cash bonuses
• Bank transfers or gift of money
• Benefits linked to the employee's performance (performance bonuses)

For employers:

The cost of the vouchers is a deductible business expense for the employer. No payroll reporting obligations arise for qualifying exempted benefits. Many companies use this exemption for Christmas vouchers and additional recognition gifts.

For directors: Company directors also qualify for the small benefit exemption on the same terms as employees.