Tax Treatment Of Travel and Subsistence – Country Money – Update

Posted in Good Advice, Our Blog, Taxation


In general, employees in the construction industry do not satisfy the criteria set out for the payment of tax-free travel or subsistence payments. However, an agreement was made between the Revenue Commissioners (Revenue) and the Construction Industry Federation and the then Construction and Electrical Workers Unions to compensate employees for expenses incurred travelling varying distances to and from building sites and to cover subsistence expenses. Country money could be paid tax free where certain conditions were satisfied. The expenses were aimed to compensate site-based employees who do not have a fixed base and, in the course of their employment, perform their work duties at different locations. 

In general terms, where expenses are “wholly, exclusively and necessarily “incurred in the course of their employment, Revenue accept that expenses of travel and subsistence not exceeding €168.26 per week (known as ‘country money’) may, subject to the exclusions below, be paid tax-free to a site-based employee where such employee is employed and working at a site which is 32km or more from the employer’s base.

Employers base

The Revenue guidance includes further clarity in relation to employees in the construction and electrical contracting industries in the Dublin area. In these cases, travel and subsistence is calculated by reference to distances from the General Post Office (GPO). The GPO may be treated as the employer’s base – provided this method is used on a consistent basis.

In practical terms a company should ensure that the 32km rule is in place in all circumstances and all employees should have travelled a minimum of 32km to site to ensure tax free payment of country money.

Country money cannot be paid tax free where the employee does not incur the expense of travelling to and from the site. In these circumstances the Revenue may argue, due to the proximity of the site to the employee’s home address, he has not incurred the necessary expenses of travel and refuse to allow the payment to be made tax free. This is a strict interpretation of the guidance.

It is for this reason that we recommend that the 32km rule is in place in all circumstances and that employees should have travelled a minimum of 32km to site. It needs to be clear that in practice a company does not  just send employees to sites which are close in proximity to where they live but they are actually sent to sites all over Ireland.

Exclusions from tax free treatment of country money

The following specific exclusions apply, and the tax-free treatment of expenses does NOT apply where:

  • the employee is working at a site which is less than 32km from the employer’s base OR
  • the employee does not incur the expense of travelling to and from the site OR
  • the employee is provided with board and lodgings by the employer OR
  • the employee is recruited to work at one site only OR
  • the employee is ‘jobbed on site’ (i.e. where the employee is recruited at a particular site).

The general and specific exclusions on the tax-free allowance for country money must be observed carefully as, if an employer pays country money tax free in error, they will be liable for the tax on the grossed-up payment.

Records of country money paid

Any payments to employees in respect of country money must also meet Revenue requirements in respect of record keeping. The records must be of a sufficient quality and detail to clearly demonstrate the payments to each employee together with the various sites where each employee has been located at any given time in the past six years.

The employer is obliged to retain a record of the following information:

  • name and address of the employee
  • date of the journey
  • reason for the journey
  • kilometres travelled
  • starting point, destination and finishing point of the journey.

The records must be retained by the company for six years after the end of the tax year to which the records refer. This is so any queries on the legitimacy of any payment to any employee can be demonstrated to Revenue on request. In the absence of any records (or of inadequate records) to support the tracking of multisite locations of employees, Revenue may deem the payments of country money to be taxable.

Please note there may be situations where expenses, whilst incurred for bona fide business purposes, may fail to achieve Revenue’s criteria to allow them to be paid tax free.


We recommend that companies should complete an audit of their country money procedures and records.

If there are instances where the company fails to meet Revenue criteria to allow expenses to be paid tax free, the company should then assess its exposure to payroll taxes underpaid and make a declaration to Revenue.

If there are any queries please do not hesitate to contact Mary Blyth for clarification .

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