The tax treatment of employer contributions to an employee PRSAs has changed effective from 1st January 2023. The changes will bring the PRSA contributions in line with other retirement savings options available in Ireland.  

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For payments prior to 1st January 2023 employer contributions to an employee PRSA were treated as Benefits in Kind (BIK) for the purposes of the employee’s income tax. This position restricted employer contributions to PRSA’s to a level that was generally significantly less than may be contributed to an occupational pension scheme for an employee. 

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Since 1st January 2023, no BIK charge applies for employer related PRSA contributions. Employer contributions to employee PRSA’s will no longer be treated for tax relief purposes as an employee contribution. Age related limits will only apply to employee PRSA contributions. This will have the effect of aligning the tax treatment of PRSA’s to that of occupational pension schemes. It should be noted that any employer contributions to employee PRSA’s paid before the end of 2022 would be taxed under the previous rules as outlined above.  

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Overall, these changes to the PRSAs system will make it easier for individuals to save for their retirement and will also help to reduce their overall tax burden.  

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Or, you can reach out to our team of experts for more information at info@cooneycarey.ie.