Foreign Earnings Deduction (FED)

The Foreign Earnings Deduction (FED) was reintroduced in 2012 to encourage temporary overseas work in specific countries. This deduction allows eligible employees to reduce their Irish taxable income. The deduction is available until 31 December 2030, with a maximum claim of €50,000 per year from 1 January 2026 (it was €35,000 per year up to the end of 2025).

Initially, in 2012, the deduction applied to the BRICS countries: Brazil, India, China, and South Africa (and Russia applied up to the 2025 tax year only). Subsequent Finance Acts expanded the list, adding:

• Algeria, The Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal, and Tanzania in 2013.
• Japan, Singapore, Korea, Saudi Arabia, the UAE, Qatar, Bahrain, Indonesia, Vietnam, Thailand, Chile, Oman, Kuwait, Mexico, and Malaysia in 2015.
• Colombia and Pakistan from 1 January 2017.
• Philippines and Türkiye for the tax years 2026 to 2030.

To be eligible for the deduction, employees must meet minimum work day requirements.

• Minimum Work Days: 2012–2014: 60 days in a qualifying country. 2015–2016: 40 days. 2017–2030: 30 days.
• Consecutive Work Days / “Qualifying day” rule:
• 2012–2014: qualifying days had to form part of a period of at least four consecutive days.
• 2015–2025: qualifying days had to form part of a period of at least three consecutive days.
• From 2026: the three-consecutive-days requirement is removed. A “qualifying day” is defined as a day the whole of which is spent in a relevant state for the purpose of performing the duties (and legislation changes also tighten that the time in the relevant state must be reasonably required for the employment duties).
• Travel days: For 2015 to 2025, time spent travelling between Ireland and a relevant state (or between relevant states) was deemed to be time spent in a relevant state; this deeming rule is stated for those years.

It is important to note that the deduction does not apply to:

• Employees paid from public revenue (e.g., civil/public service).
• Individuals whose employment income is chargeable on the remittance basis.

The deduction is calculated based on the amount of time spent working in the qualifying country. Furthermore, it cannot be claimed in conjunction with other tax reliefs, including:

• Split year relief.
• Trans-border Relief.
• The Special Assignee Relief Programme (SARP).
• The R&D Incentive (as referenced in the FED restrictions).
• The limited remittance basis.

The deduction is claimed at the end of the tax year when filing the annual income tax return.