Ireland PAYE Exclusion Orders: Revenue Clarifies Schedule E Scope (eBrief 114/26)

On 14 July 2026, Revenue published eBrief No. 114/26 confirming an update to Tax and Duty Manual Part 42-04-01 (PAYE Exclusion Orders). Paragraph 3.2 now states expressly that a PAYE Exclusion Order will only issue in respect of emoluments assessable under Schedule E and will not issue for income assessable under any other Schedule.

That clarification matters for employers and agents who apply through ROS or myAccount when non-resident directors, overseas employees, or certain pension and freelance arrangements sit near the boundary between employment income and other income categories.

Under section 985 TCA 1997, employers must deduct tax at source under PAYE from emoluments. A PAYE Exclusion Order issued under section 984 TCA relieves the payer from deducting Income Tax and USC on the covered emoluments. A liability to PRSI (employee and employer) may still arise — the manual directs readers to section 9 for PRSI treatment.

Where an Exclusion Order is in place, the Finance Act 2017 “receipts basis” change to Schedule E for 2018 onwards does not apply to that income; it continues to be assessed on the earned basis. Misclassifying income as Schedule E when it is not can waste application time and leave payroll incorrectly set up.

The manual’s main categories remain: directors (including non-resident directors) of Irish-incorporated companies; non-resident employees; non-resident pension recipients; and certain resident employees or office holders (for example specified freelance actor, medical partnership, foreign student, and treaty researcher/lecturer cases).

Applications must come in writing from the employer or other person paying emoluments via ROS/myAccount, outlining why the Order should issue. From June 2025, Revenue prefers the online PAYE Exclusion Order portal on ROS/myAccount for faster processing, though non-portal written applications remain permissible.

Before applying, confirm the payments are Schedule E emoluments — not Schedule D trading income or another head. Align contracts, board minutes, and payroll codes with the category in Part 42-04-01 that matches the worker’s facts (non-resident director, duties abroad, split-year, public-sector rules, and so on).

After an Order issues, follow the manual’s payroll submission guidance so ROS submissions reflect the Exclusion Order correctly. Revisit PRSI separately so you do not assume USC/IT relief also removes social insurance.

Keep a copy of the Order with the employee’s payroll file and diary any change of residence, duties, or payment type that could require a fresh application or withdrawal.

FinnAccountings helps Ireland and UK employers keep payroll-ready books, expense trails, and tax prep drafts with Chartered Accountant insight before you or your qualified adviser files with Revenue or HMRC. Start a free trial to organise director and cross-border employment packs — Exclusion Order applications and ROS filings remain with you or your agent.

For dual-market payroll context, see our payroll product page covering PAYE Modernisation and RTI, and use the tax calculator only for high-level estimates.