Dáil Éireann Debate, Thursday - 9 December 2021
204. Deputy Ged Nash asked the Minister for Finance if he plans to extend the transborder workers' relief beyond the current deadline as proposed by an organisation (details supplied); his views on the long-term need for an agreed structure for the fair tax treatment of cross-Border employees; and if he will make a statement on the matter. [60980/21]
View answerTrans-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. This relief is set out in section 825A of the Taxes Consolidation Act (TCA) 1997.
The relief effectively removes the foreign employment income from a liability to Irish tax where foreign tax has been paid on that employment income. 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 include 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.
Revenue understands that due to COVID-19, certain individuals whose duties of employment are normally performed outside the State, may be required to work from home in the State, which would result in them being ineligible for relief under Section 825A TCA 1997. In recognition of this, on 23 March 2020, Revenue issued updated guidance on the COVID-19 hub of its website and notified by eBrief No. 046/20, to provide for a concession in respect of this relief as follows - “where employees are required to work from home in the State due to COVID-19, such days spent 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. For example, the employment income must be fully subject to non-refundable foreign tax.” This concession initially applied in respect of the 2020 tax year and was later extended (on 21 December 2020) to the 2021 tax year.
Revenue continues to regularly review all COVID-19 related matters and, I am advised that, provided all other conditions of the relief are met Revenue’s temporary concession will be further extended into 2022, for the period that public health guidance requires individuals to work from home. Revenue will issue further guidance on this extension as soon as possible.
The COVID-19 concessional treatment is only relevant to those individuals whose employment enables them to perform their duties from home. Certain service type employments requiring in-person attendance at the workplace would not fall into this category and as such, these individuals would presumably not seek to claim the concession.
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.
To address the Deputy’s specific question relating to the fair tax treatment of cross-border workers, I would note that it is a long-standing principle of the tax code that if an individual is resident in Ireland, he/she is liable to pay tax in Ireland. 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. Ireland has an extensive network of Double Taxation Agreements, including with the United Kingdom, which have the effect of relieving double taxation on the same source income, thus a double taxation charge should not arise for cross-border workers.
It should also be noted that Ireland is exceptional in having a domestic relief such as Trans-Border Workers’ Relief. There is no comparable measure in the United Kingdom nor in many countries in mainland Europe that share land borders.
