I propose to take Questions Nos. 83, 137 and 201 together.
I am aware of the matter raised by the Deputies and can advise that my officials have been in touch with their counterparts in Northern Ireland on the matter and that I have exchanged correspondence with the Cross-Border Workers Coalition.
In the case of a person who lives in Ireland but who works in another jurisdiction, the general tax position is that, as an Irish resident, they would be subject to Irish tax on their worldwide income from any source, including the employment exercised outside of the State. At the same time, the employment may also be subject to tax in the country in which the work is carried out. In accordance with general principles of international tax, where instances of double taxation arise on the same income, relief against Irish tax may be claimed by way of a credit for any foreign tax already paid, subject to the terms of any applicable Double Taxation Agreement (DTA). Unilateral relief may also be available in certain circumstances under domestic Irish legislation.
In the case of a person who lives in the State but who works in Northern Ireland, the terms of the Ireland/UK DTA provide for relief by allowing the Irish resident to claim a credit for the UK tax paid against any Irish tax that may be due on the same income.
The relief referred to by the Deputies is in addition to the above, and may apply, subject to certain conditions, where a person lives in Ireland but works wholly outside of the State.
I would advise the Deputies that this relief applies not only to persons with a UK based employment, but also for employments in the EU and DTA-network regions in compliance with Ireland’s treaty obligations. It therefore has broader application beyond the Northern Ireland issues raised.
The conditions for this Trans-Border relief are set out in section 825A of the Taxes Consolidation Act, 1997. In general, in order to qualify for this relief the individual must:
- Be tax resident in Ireland;
- work in a country that Ireland has a Double Taxation Agreement with in an employment held for a continuous period of 13 weeks in the year;
- the employment duties must be wholly exercised outside of the State with none performed in the State, save for duties considered incidental to the foreign employment;
- have paid tax in the other country and are not due a refund of the tax; and
- be present in Ireland for at least one day for every week they work abroad.
Where the Trans-Border relief applies in the case of an Irish resident who works in the UK, it operates in such a way that only UK tax is charged on the employment income and there is no charge to Irish tax on the same income. Any additional Irish tax that may be due is foregone under the domestic Irish legislation.
This tax relief is not normally available for Irish residents who work from home in Ireland. However, in light of the COVID-19 pandemic, Revenue have confirmed that if 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.
The flexibility being shown in the context of the pandemic should not be confused with the overall operation of the measure which requires that a person works outside the State and pays tax in the other jurisdiction in order to qualify for the relief.
In the event that the existing arrangements were to be revisited and done so specifically for Northern Ireland border workers, a number of issues could arise including in relation to equity between Irish residents in respect of employments carried out in Ireland, the competitive position of Irish employers, concerns regarding the potential for double non-taxation and established principles of international tax.
Any such consideration would also need to be examined in the overall context of Ireland’s EU membership, noting that it would likely not be possible for Ireland to give preferential treatment to UK based employments or Northern Ireland based employments only without also giving similar treatment to other EU Member States or DTA jurisdictions.
As is the case with all taxation matters, this position will be kept under review especially in the context of Brexit. However, I would assure the Deputies that in circumstances where this relief does not apply, relief for foreign tax may be applicable in the normal course set out above.