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Tax-free allowances for Michael McGrath’s seven children will bring EU pay package to €443,000 a year

New EU commissioner will receive a base salary of €314,000 plus entertainment, household and residence allowances

Minister for Finance Michael McGrath during the announcement of his nomination as Ireland's next EU commissioner on Tuesday. Photograph: Gareth Chaney/PA Wire

Arthur Beesley
Wed Jun 26 2024 - 06:00

Incoming EU commissioner Michael McGrath will receive annual remuneration up to €443,000 when he moves to Brussels, as he stands to benefit from large tax-free family allowances for his seven children.

With generous monthly payments for child dependents and their education, his elevation to the European Commission will more than double his pay as TD and Minister for Finance.

But McGrath may yet receive a larger package if he is appointed to one of seven commission vice-presidencies, a more senior post that would pay him up to €488,000.

McGrath’s monthly pay will be about €26,169.29. He will also receive residence, household and entertainment allowances – and allowances for children that continue in early adult years if they remain in education.

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Payments for commissioners who are parents include a dependent child allowance of €471.80 per month per child. In McGrath’s case the annual benefit will be €39,631.20.

In addition, commissioners can claim an allowance for “actual education costs” up to €320.12 per month for each dependent child. In McGrath’s case the potential annual benefit will be €26,890.08.

Asked whether dependent child and education allowances were subject to income tax, the commission said: “Allowances are not taxed (they are deducted from the taxable basis).”

[ Michael McGrath ‘not motivated by money’ in decision to become Irish EU commissioner ]

As a Minister in Dublin, McGrath’s annual pay was €204,571. Such remuneration, increased this month under a national deal with public sector unions, comprised his €112,553 TD’s salary and €92,018 ministerial pay.

After the Cabinet signed off on his nomination to Ireland’s commission seat, his pay will rise to levels far above the Taoiseach’s €241,480 salary.

EU regulations suggest McGrath’s annual salary as an ordinary commission member will be about €314,031.47. If he becomes a vice-president, the salary would be €348,923.85.

The annual residence allowance is worth 15 per cent of salary, €47,104.72 for ordinary commissioners or €52,388.58 for vice-presidents.

[ Who is Michael McGrath? Father-of-seven and former accountant’s long political career leads to Europe ]

As an ordinary commissioner, he will receive a €607.71 monthly entertainment allowance. This allowance, for “meals and other forms of representation tasks”, is worth €7,292.52 per year. Vice-presidents receive €10,936.56.

He also stands to receive an annual household allowance for married officials, set at €215.91 per month plus 2 per cent of basic salary – €8,871.54 for ordinary commissioners or €9,569.40 for vice-presidents. This too is tax-free.

The European Commission said salaries were set by member states, adding that commissioners pay a progressive tax rate “up to 45 per cent” and social security contributions.

“The maximum rate [45 per cent] applies to most of their salary, as they hold the most senior positions in the commission. Additionally, commissioners pay a solidarity levy [an additional tax] of 7 per cent.”

Arthur Beesley

Arthur Beesley

Arthur Beesley is Current Affairs Editor of The Irish Times

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