Employee supplying goods to me

Hi,

I have an employee who has a proposal which will be in both our interests if we go ahead with it.
He has expertise in an area and will import a specialised line of stock and sell it to me cheaper than I am currently getting it.

The ideal situation is that I pay the Asian source supplier, my employee takes in the goods and develops them and I pay him 10% of the supply cost. I presume I will have to treat this as salary and operate PAYE? (despite the fact that he had been operating a business like this himself for a few years anyway)

If he (as a sole trader) buys the product and invoices me can I pay him for this as a supplier without bringing PAYE into it?

If he sets up a limited company and supplies me, can I pay the company without having to operate PAYE?

He will continue to draw his salary from me as normal as an employee.

Thanks and I hope the above is clear.

Tommy

If the employee is registered and making returns as a sole trader I don't see why he shouldn't be treated as a normal supplier, nothing to do with his Paye employment.

Supplying goods to you at a profit is a trade. He supplies you with an invoice (with VAT if applicable) and you pay that.

For him, he will be taxed under Schedule D Case I if a sole trader and if it is a company, it will be Schedule E (if salary) or Schedule F (if dividends). Either way, its his problem and he needs to do accounts, tax returns etc.

From a Revenue tax point of view, there is no issue here. However, from a commercial point of view, this is the real issue. Will his employment duties suffer, if a employment issue arises (or a supplier issue) how will this be resolved so as not to affect the other?

Also, watch Revenue salary sacrifice rules. Is this a genuine commercial transaction at arms lenght whereby salary is not being sacrificed so as to avoid PAYE/PRSI?