Irish income tax liability for secondees
QUESTION: I have businesses in Belfast and I need to second staff from Belfast to Dublin for a period. Will I have to operate an Irish payroll?
ANSWER: Whether you will be liable to operate an Irish payroll will depend on the length of the secondments. The Irish Tax Law for secondees or Short Term Assignees (STA's) is complex and has developed following updated legislation published in December 2016 and in April 2018.
So long as specific conditions are met, for Irish tax purposes, an Irish payroll tax exemption may be able to be obtained for three categories of secondees, the most relevant and important being those seconded for less than 183 days and those seconded for less than 60 work days. If the secondee is in Ireland for more than 183 days then it will not be possible to obtain an exemption from Irish payroll taxes.
This is a complex area however, generally speaking any employment income received by a secondee is only taxable in their home state if the secondment does not exceed 183 days in duration provided certain conditions are met, particularly, their remuneration is paid by or on behalf of an employer who is not resident in Ireland.
To meet this condition therefore, it is important that as a secondee seconded to Ireland they must not have an Irish resident employer or be paid by an Irish resident employer. It is important therefore that as a UK employer you do not recharge the cost of employing the secondee to an Irish resident employer as this will fall foul of the regulations and the secondee be liable to pay Irish Income because the non-resident employer condition would not be satisfied. Finally, where the 183 day exemption applies it is necessary to obtain clearance from the Irish Revenue Authorities not to operate Irish payroll.
The second exemption is the 60 work day exemption which is a less onerous set of conditions enabling a foreign employer to obtain an Irish payroll tax exemption. No clearance from the Irish Revenue Commissioners is required. To obtain a 60 work day exemption three conditions must be satisfied the first two are that the secondee is not on the payroll of an Irish employer and the secondee is resident in a country other than Ireland which has a double taxation treaty with Ireland. The third condition is the work day condition which has been made more complicated due to a law change in 2018, which requires the consideration of the number of days worked over multiple tax years. Were the secondee is present in Ireland during two consecutive tax years then the aggregate days worked over that two year period must not exceed 60 for the work day exemption to apply.
If the secondee is working in Ireland for more than two years then the legislation refers to 'recurring annual basis' and the 60 work day exemption does not apply and the employer would have to go back and seek to rely on the 183 day exemption subject to all of its conditions.
Relatively recent changes in the Irish legislation have made it very easy for UK employers who are seconding employees to fall within the charge to Irish taxation. If clearance is required it must be obtained within 30 days off the secondee commencing their Irish duties which presents a practical problem in that quite often employers do not know how long a secondee is going to work in Ireland.
:: Paddy Harty (email@example.com) is senior tax director at PKF-FPM (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies