Dáil Éireann debate -
Wednesday, 25 Jan 1995

Vol. 448 No. 1

Written Answers. - Taxation of Cross-Border Workers.

Desmond J. O'Malley

Question:

18 Mr. O'Malley asked the Minister for Finance if his attention has been drawn to the concern about the tax situation of residents in the Republic of Ireland working in Northern Ireland; and if he will make a statement on the matter. [1569/95]

Helen Keogh

Question:

32 Ms Keogh asked the Minister for Finance if his attention has been drawn to the concern about the tax situation of residents in the Republic of Ireland working in Northern Ireland; and if he will make a statement on the matter. [1570/95]

Minister for Finance (Mr. Quinn)

I propose to take Questions Nos. 18 and 32 together.

Irish residents are taxed on their worldwide income wherever it arises. Irish residents who are cross-Border workers are, therefore, liable for tax on their income accruing in Northern Ireland. Under the 1976 Double Taxation Agreement with the UK, however, cross-Border workers are given credit on their tax liability in the country of residence for tax paid in the country of work. As some rates of taxation are higher in the Republic than in the UK this in effect means that cross-Border workers resident in the South are liable for some Irish taxation in addition to UK taxation. This is in accordance with the general practice adopted by most member states of the European Union in regard to foreign income earned by residents. However, some member states have included in their double taxation agreements provisions in regard to frontier workers and in the majority of these cases taxation is based only in the country of residence.

The position here is that, except where the PRSI allowance applies, a cross-Border worker pays exactly the same amount of income tax and levies as another Irish resident with the same income. The PRSI allowance of £286 is only available to taxpayers who pay the full rate of PRSI. I have recently been made aware of the concerns expressed by some cross-Border workers and I am having the whole question examined. It is a difficult and complex area and is affected by double taxation arrangements. I should mention that it may be impossible to come up with a solution which caters directly for the individuals affected and which is fair to all the taxpayers involved i.e. both the cross-Border workers and all other Irish resident taxpayers. It is important, therefore, that expectations of relief or some special arrangements should not be built up.