Taxman missing out on thousands
TOP 'talent' at state-owned broadcaster RTE may have to change pay arrangements as the Revenue Commissioners ramp up their crackdown on pay practices.
The public sector broadcaster's big names, including Pat Kenny, Ryan Tubridy, Marian Finucane and Miriam O'Callaghan, are paid through private companies rather than as PAYE workers, which can potentially slash tens of thousands off tax bills, according to experts.
"If an employer pays you €100,000 into your hand, you get half of that or less if you're an employee, whereas if those fees are paid to a company, the full amount would be paid to that company," explains Niamh Keogh of tax experts William Fry. "Plus you must pay PRSI at 10.75 per cent," she added.
"There are more generous limits to what you can do if you're managing your own company, for example a pension fund with a generous payout," Keogh says.
There are certain anti-avoidance rules for companies and further tax can be required later, as Keogh points out -- but there is no doubt that this arrangement allows the opportunity to cut tax bills, with corporation tax of just 12.5 per cent instead of heftier income tax.
"Companies can also get deductions for certain expenses. If you keep the money in long enough and wind up the company down the road, instead of income tax you pay Capital Gains Tax, which is just 30 per cent."
"The Revenue has been cracking down on several areas where it see individuals as employees rather than self-employed. It is highly likely to have RTE staffers in its sights," says another tax consultant.
Revenue told the Sunday Independent that the practice was one that it had set its sights on.
"If Revenue finds that individuals are, in fact, employees rather than self-employed contractors, they will notify the person, engaging those individuals to register for and operate the PAYE/ Universal Social Charge systems on payments made to those individuals and to also operate the relevant PRSI system," a Revenue spokeswoman warned.
RTE stars contacted by the Sunday Independent did not comment.
RTE's spokeswoman said third-party contracts "more readily match operational requirements, as it allows the companies to provide services to a range of parties and provides RTE with greater flexibility in the use of the presenter and in concluding the arrangement where such may be required".
Personal tax rates have come under increased scrutiny over the last week as government departments look to the budget. The Fine Gael/Labour promise that basic income tax rates would not be increased is coming under pressure. Last friday Brian Hayes, junior minister at the Department of Finance, admitted: "That is the ambition of the Government -- whether it can be achieved is another matter."
Last week, the BBC revealed that 300 of its top stars were being paid through "private service" companies.