Employer PRSA Contributions & BIK
By Patrick O’Shea Pensions Advisory Services Manager Irish Life
Revenue issued guidance today 19/05/2025 on the BIK treatment of employer PRSA contributions.
They confirmed that BIK on employer PRSA contributions is not calculated in each weekly / monthly payroll and is instead calculated in the last payroll period for that year. This means that a BIK tax liability will only apply if the employer PRSA contribution is greater than 100% of the employee’s earnings at year end, even if the contribution is more than 100% of earnings as at the time the contribution was made.
Since the publication of the new employer PRSA contribution rules we have highlighted the need for this and are pleased that Revenue have issued practical guidance on the new rules.
While this clarification is welcome, employers and employees might still consider if it is prudent in their circumstances to keep employer PRSA contributions in line with earnings year-to-date, for example to allow for situations where earnings might cease due to an employee leaving service. An unexpected BIK tax liability would not be grounds for a refund from a PRSA.
Revenue has also clarified the treatment for corporation tax. Where the employer’s accounting period is not a calendar year ending 31 December then the corporation tax limit is assessed separately for each calendar year. For example, if an employer accounting period runs from 1 July 2025 to 30 June 2026, then employer contributions paid in 2025 are checked against the employee’s 2025 earnings and employer contributions paid in 2026 are checked against the employee’s 2026 earnings.
https://www.irishlife.ie/blog/what-is-a-prsa/