Cecilia Keaveney
Question:98 Cecilia Keaveney asked the Minister for Finance the exemptions, if any, currently in force for cross-Border workers; and the plans, if any, he has to alter the status of Government workers. [9635/96]
Written Answers. - Cross-Border Workers.
A cross-Border worker to whom the Deputy refers may either be a resident of the State for tax purposes who works in Northern Ireland or the reverse. As regards both the above categories, their taxation is governed by the domestic laws of each jurisdiction and by the Ireland-UK Double Taxation Convention. Exemption from taxation in one or other jurisdiction may occur in the following circumstances: where a person is present in the other state for a period not exceeding in the aggregate 183 days in the fiscal year concerned; and where a person is paid by the State or a local authority thereof for services rendered in the discharge of functions of a governmental nature. In all other cases, the income from the employment will be taxable in both jurisdictions. However, the country of residence will grant a credit for the tax paid on the income in the other state.
As the Deputy is no doubt aware, early in 1995 I established a special interdepartmental committee, made up of officials from my Department and the Office of the Revenue Commissioners, to look at the issues involved in the taxation of cross-Border workers resident in the State and working in Northern Ireland. The committee reported to me in January of this year and made a number of recommendations on what action should be followed regarding the tax treatment of cross-Border workers.
One of the main findings of the committee was that the treatment of cross-Border workers for the purposes of income tax is fair and reasonable visá-vis other Irish taxpayers. However, the committee did recommend that cross-Border workers should be exempted from paying the 1.25 per cent health contribution and the 1 per cent employment and training levy on their Northern Irish income.
Having studied and accepted the findings of the committee, I announced on budget day that from 6 April the Northern Irish earnings of cross-Border workers will be exempted from the payment of the health and employment and training levies. For a person with a yearly earnings of £15,000, the saving from this exemption which is now in force is £337.50 per annum.
Article 18 of the Ireland-UK Double Taxation Treaty relates to the taxation of Government workers. The interdepartmental committee recommended that the relevant authorities should try to resolve the differences of opinion which exist as respects the categories of workers covered by the Government services article. I understand that there have been recent negotiations between the Irish and UK Revenue authorities for the purpose of reviewing the article in light of recent judicial decisions which affect it. It is not possible at this stage to say what the outcome of the discussions will be.