Irish Government urged to change tax rules for cross-border workers

Conor Dowds, co-chair of the new Cross Border Workers Coalition.

A NEW lobby group has called on the Irish Government to urgently change its tax rules to avoid penalising cross border workers in the new working from home era.

The Cross Border Workers Coalition (CBWC) is made up of individual employees who live in the border regions of the Republic, but work for companies in the north.

It says personal tax rules in the Republic can inflict a ‘double tax' on cross border workers in their situation, if they perform any work-from-home

Irish Finance Minister Paschal Donohoe TD has temporarily waived the current rules until the end of 2021, but Conor Dowds, who co-chairs the coalition, described that as a “sticking-plaster approach”, warning that it could deter foreign investment in border areas.

The CBWC said businesses across the island of Ireland who rely on a cross-border workforce could be restricted from offering staff remote work opportunities and struggle to attract the best talent for their companies in the coming years.

“If the Irish Government continues its inaction on these damaging tax rules, Northern companies will pay the price, said Mr Dowds.

“Remote work is here to stay, and current, outdated legislation threatens to impose an unfair tax penalty on thousands of cross-border workers seeking to work-from-home.”

The key issues surrounds a tax relief the Irish Government normally applies to avoid double-tax scenarios.

But legislation in the Republic states to qualify for that relief: “The employment duties must be wholly exercised outside of the State with none performed in the State.”

In a statement, the Department of Finance in Dublin said: “The Minister is aware that this issue has been raised specifically in relation to Irish residents who work in Northern Ireland and, as indicated at Report Stage of Finance Act 2020, officials have been asked to look at the operation of the measure in the context of the Tax Strategy Group (TSG) 2021 process.

“The TSG process will consider all relevant matters including the equity of treatment between Irish residents who pay tax in Ireland, the competitive position of Irish employers, and concerns regarding the potential for double non-taxation and established principles of international tax.”

It added that in circumstances where cross-border relief does not apply, “relief for foreign tax may be applicable”.

But Conor Dowds said a permanent solution must be found.

“While Finance Minister Paschal Donohoe TD's temporary waiver on these tax rules was welcome initially, his failure to introduce permanent reform will inspire no confidence among uncertain Northern businesses," he said.

“If the Finance Minister is serious about protecting the all-island economy, he must introduce urgent reform before businesses across the North suffer from these unfair tax rules. Now is the time for action.”

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