Dáil Éireann Debate, Tuesday - 9 November 2021
110. Deputy Ged Nash asked the Minister for Finance the status of his plans regarding double tax rules for cross-Border workers (details supplied) who are based in Ireland given the temporary Covid-19 waiver on these rules ends in January 2022; and if he will make a statement on the matter. [54319/21]
View answerThe Deputy is referring to the taxation of cross-border workers who are Irish resident but commute to work in another jurisdiction and claim relief in accordance with section 825A Taxes Consolidation Act (TCA) 1997, which is commonly referred to as Trans-Border Workers’ Relief.
The relief effectively removes the foreign employment income from a liability to Irish tax where foreign tax has been paid on that income (and such foreign tax is not refundable). In simple terms, the effect of the measure is that Irish tax will only arise where the individual has income other than income from a foreign employment.
The relief applies subject to certain conditions, which includes the requirement that the duties of a qualifying employment are performed wholly outside the State in a country with which Ireland has a Double Taxation Agreement. There is an exception in respect of merely incidental duties which may be performed in the State.
I am advised by Revenue that, in light of the unprecedented circumstances arising due to the Covid-19 pandemic and the resulting public health restrictions to limit movement, for the tax years 2020 and 2021, a concessional treatment for such taxpayers would apply, whereby if employees are required to work from home in the State due to Covid-19, such days working at home in the State will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met. The effect of this concessional treatment allows individuals resident in the State and working for a non-resident employer, carry out their employment duties in the State and continue to pay tax in another jurisdiction.
I am aware that there have been calls to place this concessional treatment on a statutory footing so that individuals who are resident in the State, but work outside the State for a non-resident employer, can continue to avail of the relief if they exercise their duties of employment in the State.
During the debates on Finance Bill 2020, I undertook that this matter would be examined as part of the work of the Tax Strategy Group (TSG) for 2021. The resultant paper was discussed by the TSG as part of its deliberations on 8 September last. The examination encompassed very detailed consideration of all relevant matters including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax. The review identified a number of significant concerns from a policy perspective when having regard to the interest of the wider body of taxpayers encompassing Irish resident employees and employers. The full TSG paper (TSG Paper 21/04) can be located here - www.gov.ie/en/collection/d6bc7-budget-2022-tax-strategy-group-papers/.
At present, I and my Department continue to give this matter consideration having regard to the comprehensive review carried out under the auspices of the TSG and the fundamental points which the TSG paper raises.
It should also be noted that Ireland has an extensive network of Double Taxation Agreements which have the effect of eliminating double taxation on the same income source. Relief is generally afforded by way of exemption or granting relief for foreign tax paid in the country of residence of the individual.
To answer the Deputy’s specific question relating to double-tax rules for cross-border workers, in the event that an individual does not qualify for Trans-Border Workers’ Relief he/she may be entitled to relief from double taxation under the terms of the relevant Double Taxation Agreement, thus a double taxation charge would not arise in such circumstances.
It should also be noted that Ireland is exceptional in having section 825A of the TCA in place; such a measure does not exist in many European countries that share land borders.
