European Commission has requested Ireland to change its legislation on termination payments paid to individuals when their employment contracts end, as the Commission is of the opinion that the Irish rules are a restriction on the free movement of workers within the EU. When calculating the tax relief on termination payments Ireland takes into account the number of years worked with the employer in Ireland but does not bring into the calculation years spent working for the same group in other EU member states. Consequently, if an employee has worked for a large number of years for a group but only for a short time in the Irish member of that group of companies, the termination payment will be much lower than it might be in other EU jurisdictions.
If Ireland does not take any action in response to this request, which is in the form of a reasoned opinion, the case may be referred by the European Commission to the European Court of Justice.
