Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It is a long-standing and broadly accepted rule that individuals who are tax resident in Ireland are liable to pay Irish tax.

Trans-Border Workers’ Relief may apply in the case of an individual resident in the State but who commutes to his or her place of work outside the State. To avail of the relief, the duties of employment must be performed outside the State in a country with which Ireland has a Double Taxation Agreement.

Where the Trans-Border Workers’ 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 on the employment income and there is no charge to Irish tax on the same income. Any additional Irish tax that may be due is foregone. As such, it is a very generous relief for those that can avail of it, particularly as the personal income tax rates in the UK are generally lower than those in Ireland.

The relief is not normally available for Irish residents who work from home. However, in light of the unprecedented circumstances arising due to the Covid-19 pandemic, Revenue confirmed that a concessional treatment for such taxpayers would apply for 2020, 2021 and for the period in 2022 in which public health measures required employees to work from home.

With the removal of public health restrictions, the temporary concession ceased with effect from 1 April 2022. As such, in order for individuals to avail of Trans-Border Workers’ Relief, all duties of employment must be carried out outside of the State (with the exception of those that are merely incidental).

Where Trans-Border Workers’ Relief does not apply, a person resident in Ireland will be liable for personal tax in Ireland as well as in that other jurisdiction. However, it is important to note that in practice there is no double taxation. Further, the individual will pay the same amount of Irish tax as other Irish residents on the same income.

The Department of Finance undertook a review of Trans-Border Workers’ Relief under the auspices of the Tax Strategy Group (TSG) in 2021. The review raised significant issues from a tax policy perspective, in particular the fundamental points regarding the equitable treatment of all Irish residents and the need to preserve the integrity of the tax system. The paper can be viewed at the following link: www.gov.ie/pdf/?file=https://assets.gov.ie/198265/43f82639-34ae-4e8d-bfdc-a49ca9b06560.pdf#page=null

In general, the issue of cross border workers and the availability of remote working options has potential tax implications not only for this country but also on an international level, given the increase in the extent of remote working as a result of the Covid-19 pandemic. It is a very complex matter and the State cannot move unilaterally. Discussions in relation to global mobility and the tax policy implications for cross border workers have already started at both the EU and the OECD. My Department is fully engaging with all the relevant stakeholders and is contributing to the policy discussions on the issue.

To support work in this area, the following three issues are actively being pursued:

1.Obtain Better Data – there is a general acceptance that data in relation to the nature and extent of cross-border working could be improved. The ESRI has been commissioned to undertake a research project in this area. It is understood that this work is in progress by the ESRI.

2.Minimise Administrative Burden – Revenue are currently looking at ways to minimise and simplify the administrative burden insofar as possible.

3.International Discussions – the Department of Finance is actively engaging in any international discussions on the policy implications of cross-border working. The Department will also engage bilaterally with other jurisdictions as appropriate to the circumstances.