Dáil Éireann Debate, Tuesday - 27 November 2012
231. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the reason that since 1 January 2012, workers in this State, who are resident in the north of Ireland and who hold medical cards there are no longer exempt from paying the health levy component of the universal social charge; and his plans to rectify this. [52511/12]
View answerThe Universal Social Charge (USC) was introduced on 1 January 2011. It is charged at rates of 2% on the first €10,036 of income, 4% on the next €5,980 and 7% on the balance.
In certain circumstances different rates are applied. Full eligibility for services under Part IV of the Health Act 1970, by virtue of sections 45 and 45A of that Act or Council Regulation (EC) No. 883/2004, entitles an individual to be charged at a rate of USC of 4% on income over €16,016, rather than 7%.
Full eligibility is means tested and where an individual is fully eligible for health services, he or she receives a medical card. Certain categories of workers from other European member states are automatically entitled to medical cards based on EU Regulations and Health Service Executive (HSE) guidelines, and without the need for means testing.
I am advised by the Revenue Commissioners that during 2011, Revenue applied the 4% rate to workers in this State who were resident in Northern Ireland on the understanding that, as EU workers, they were fully eligible for health services as described and, therefore, automatically entitled to medical cards.
However, following examination of the EU legislation and consultation with the HSE, it was established in 2011 that workers who are resident in other EU Member States and who travel to the State to exercise the duties of their employment (frontier workers) do not have automatic entitlement to a medical card. They may have entitlement to a medical card under Irish legislation where the HSE regards them as being ordinarily resident1 in the State but such entitlement is subject to a means test as in the case of workers resident in the State.
Revenue published clarification in December 2011 and details can be found at http://www.revenue.ie/en/practitioner/ebrief/archive/2011/no-812011.html
Accordingly, with effect from 1 January 2012, frontier workers from another EU Member State (including, Northern Ireland) who do not obtain a full Irish medical card, are liable to the normal maximum 7% USC rate, where they have sufficient income for this rate to apply.
It should be noted that credit for USC paid in Ireland should be available against tax due in a frontier worker’s country of residence where there is a tax treaty in place between Ireland and that country. Ireland has double taxation treaties with all member states of the EU.
This and further information on the USC is available from the Revenue website at http://www.revenue.ie/en/tax/usc/index.html
1The term ordinarily resident as distinct from resident refers to an individual's pattern of residence over a number of years. If the individual comes to Ireland for the first time and remains resident for three consecutive tax years, he or she will become ordinarily resident from the beginning of the fourth tax year.
