Niall Collins (Limerick County, Fianna Fail)
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121. To ask the Minister for Finance his views on reports that new rules from the Revenue Commissioners governing taxation of foreign employees working temporarily here could seriously undermine attractiveness for companies considering locating here; and if he will make a statement on the matter. [8022/17]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by Revenue that income tax issues relating to foreign assignees working here temporarily are set out in the Revenue's Statement of Practice IT-3-07. The Statement of Practice was updated as a matter of routine in December 2016. In accordance with the terms of the OECD Model Convention on Income and on Capital, it re-affirmed the longstanding position in respect of the taxation of foreign assignees to Ireland and the obligations on employers in relation to the operation of the Irish PAYE system.

With effect from 1 January 2006, income attributable to the performance, in the State, of duties of a foreign employment has been chargeable to tax under sections 18 and 19 of the Taxes Consolidation Act 1997. Consequently employers are obliged to make the appropriate deductions from that income under the PAYE system.

However, under the terms of the Employment article of Double Taxation Agreements between Ireland and other countries, income attributable to the performance in the State of the duties of an employment may be relieved from the charge to Irish tax, and in such cases the tax deducted under PAYE is generally repaid to the individual. In order to reduce the administrative burden on employers, Revenue do not require an employer in these circumstances to operate PAYE where the employee is under the direction and control of the foreign employer and the duties of that office or employment are performed in the State for not more than 60 working days in total in a year of assessment.

The updated Statement of Practice contains additional guidance (in line with the internationally agreed commentary on the OECD Model Tax Convention) on this release from the obligation to operate PAYE. I am advised by Revenue that this position is not new and has been clarified by Revenue in extensive discussions with tax practitioner groups over the last two years. The additional guidance should improve certainty for employers as to their PAYE obligations, and certainty is frequently cited as a key concern which businesses take into account when making long-term business investment decisions. I am further advised by Revenue that, as necessary, it will seek to enhance its guidance in this area, to ensure that employers subject to these provisions have certainty as to their obligations at all times.