Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I am aware of the matters raised by the Deputy and I can advise that my officials have been in touch with their counterparts in Northern Ireland regarding this matter. In that regard, I also note that this relief applies not only to persons with UK-based employment but also in respect of employment in the EU and double taxation arrangement network regions in compliance with Ireland's treaty obligations. This relief has broader obligations beyond Northern Ireland therefore, and the suggestion regarding facilitating cross-Border workers should be viewed in that context.

In the case of a person living in Ireland but working in another jurisdiction, the general tax position is that, as an Irish resident, he or she is subject to Irish tax on his or her world-wide income from any source, including the employment exercised outside of the State. At the same time, the employment may be subject to tax in the country in which the work is carried out. In accordance with general principles of international tax, where instances of double taxation arise on the same income, relief against Irish tax may be claimed by way of a credit for any foreign tax already paid, subject to the terms of any applicable double taxation agreement.

Unilateral relief may also be available in certain circumstances under domestic Irish legislation. In the case of a person living in this State, but working in Northern Ireland, the terms of the Ireland-UK double taxation agreement provide for relief by allowing the Irish resident to claim a tax credit for the UK tax paid against any Irish tax which may be due on the same income. The trans-border relief referred to by Deputy Doherty is in addition to the relief provided by the double taxation agreement and may apply, subject to certain conditions, where a person lives in Ireland but works wholly outside the State.

As set out in section 825A of the Taxes Consolidation Act 1997, in order to qualify for this relief the individual: must be tax resident in Ireland; work in a country that has a double taxation agreement, DTA, with Ireland; be in an employment held for a continuous period of 13 weeks in the year and the employment duties must be wholly exercised outside of the State, with none performed within the State, save for duties considered incidental to the foreign employment; have paid tax in the other country and is not due a refund of the tax; and be present in Ireland for at least one day of every week that he or she works abroad.

Where the trans-border relief applies in the case of an Irish resident who works in the UK, it operates in such a way that only UK tax is charged in the employment income and there is no charge to Irish tax on the same income. Any additional Irish tax that may be due is forgone under domestic Irish legislation.

This tax relief is not normally available for Irish residents who work from home in Ireland. In light of the pandemic, however, Revenue has confirmed that if the employee is required to work from home in the State due to Covid-19, such days spent working at home in the State will not preclude an individual from being entitled to claim this relief providing that all other conditions of the relief are met.

I would like to be clear that the flexibility being shown in the context of the pandemic should not be confused with the overall operation of the measure that requires that a person works outside the State and pays tax in other jurisdictions in order to qualify for the relief.

In the event that the other existing arrangements were to be revisited and done so specifically for Northern Ireland Border workers, a number of issues could arise, including: questions of equitable treatment of Irish residents in respect of employments carried out in Ireland; the competitive position of Irish employers vis-à-visthose in other countries; concerns around the potential for double non-taxation of such workers; and questions around compliance with established principles of international tax.

Any such consideration would also need to be examined in the overall context of Ireland's EU membership, noting that it would likely not be possible for Ireland to give preferential treatment to UK-based employments or Northern Ireland-based employments only without giving similar treatment to other EU member states or double taxation agreement jurisdictions.

As is the case with all taxation maters, this position will be kept under review, and especially in the context of Brexit. I assure Deputy Doherty, however, that in circumstances where this relief does not apply, then relief for foreign tax may be applicable in the normal course, as I set out earlier. As I have already indicated to Deputy Doherty, this is a matter that my officials and the Revenue Commissioners are considering and is an issue that I would propose further examination of in the tax strategy group papers that will be published by the summer of next year.

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