I propose to take Questions Nos. 229 to 231, inclusive, together.
Transborder 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.
As the Deputy may be aware, the operation of this relieving measure is a matter for the Revenue Commissioners. 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, 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 measures require employees to work from home.
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, as they would already qualify for the relief.
Further guidance on the relief and the extension of the concession in 2022 may be found in Tax and Duty Manual www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-34/index.aspx - Transborder Workers’ Relief.
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/.
This matter was discussed at both the Committee and Report Stages of Finance Bill 2021 in Dáil Éireann and, in fact, it was during the Report Stage debate that I informed the House of Revenue's proposed extension of the temporary concessionary treatment into next year as already mentioned. I and my Department continue to monitor the issue having regard to the comprehensive review carried out under the auspices of the TSG and the fundamental points which the TSG paper raises.
The Deputy may also wish to note that Ireland is exceptional in having a domestic relief such as Transborder Workers’ Relief. There is no comparable measure in the United Kingdom nor in many countries in mainland Europe that share land borders.