Finian McGrath (Dublin North Central, Independent)
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To ask the Minister for Finance if he is satisfied with the situation in which self employed persons find themselves when their business and income operate exclusively in Northern Ireland but they themselves are resident in the Republic and who, despite paying tax in Northern Ireland, are subject to further income tax in the Republic of Ireland while PAYE employees in the same scenario are entitled to a reduction in income tax under Section 13 of the Finance Act 1998; and if he will make a statement on the matter. [57180/12]

Michael Noonan (Limerick City, Fine Gael)
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An individual who is tax resident in the State is taxable here on his or her worldwide income. Section 825A Taxes Consolidation Act 1997 (as inserted by section 13 Finance Act 1998) provides that where an employee, who is resident in the State for tax purposes, holds a qualifying employment in another jurisdiction and –

(a) the income from that employment is taxed by that jurisdiction and such tax is not repaid or repayable, (b) the duties of that employment are exercised wholly outside the State, (c) the employment is held for a continuous period of not less than 13 weeks, and (d) for every week during which the employee works outside the State, he or she is present in the State for at least one day in that week, the amount of Irish tax due on that income shall not exceed the amount known as the “specified amount”.

In simple terms, taking the case of an unmarried individual (known as a cross border worker) tax resident in State whose only income is from working full time in Northern Ireland, where UK tax has been paid in full on that employment income, there is no additional Irish tax liability on that same income.

The relief under Section 825A does not extend to those individuals who are tax resident in the State but carry out their self-employment business outside the State (including in Northern Ireland). In such cases, the individual is liable to both UK tax and Irish tax on the profits of that business. However, double taxation on the same profits is avoided by Article 21 (Elimination of Double Taxation) of the Ireland-UK Double Taxation Convention which provides that the State will give a credit against Irish tax due on such profits for the UK tax paid on those same profits.

It is not necessarily the case that a self-employed individual working exclusively in Northern Ireland but resident in Ireland would pay additional tax in Ireland – her/his UK liability might be higher than her/his Irish liability, depending on the circumstances and the prevailing tax rates, credits and allowances. Equally it is possible that an employee’s liability to income tax might be higher in the UK than in Ireland.

I have no plans to change the current provisions but like all tax issues it is kept under review.