Transborder Workers Relief

What is the transborder workers relief?

Irish tax resident individuals who commute weekly to an employment outside of the Republic of Ireland (ROI), may be able to claim relief from Irish tax in respect of their foreign employment income. If that employment income is their only income, Irish tax and USC may be fully relieved. Due to the requirement to be present in the ROI for at least one day of every week, the relief is typically claimed by employees working in the UK (incl. Northern Ireland), however, it may be claimed further afield also.

Conditions

Summary of main conditions:

• An individual must hold an employment outside the ROI for a continuous period of at least 13 weeks in a tax year, in a country with which Ireland has a Double Taxation Agreement;
• The duties of the foreign employment must be exercised wholly outside the ROI in a country with which Ireland has a Double Taxation Agreement;
• For every week during which the individual works outside the ROI in the employment, he or she must be present in the ROI for at least part of one day in that week;
• Foreign tax due on the income must have been paid to the relevant authorities and must not have been refunded or, be refundable.

Updated guidelines

Revenue has updated their guidance to include examples illustrating various scenarios and providing some clarity on various issues including:

• Social security: Transborder workers will not typically pay PRSI (Irish social security) in the ROI as they are subject to employment tax in another country;
• The Covid-19 concession is extended to 31 Dec 2021 i.e. where employees are required to work from home in the ROI due to COVID-19, such days spent working at home in the ROI will not preclude an individual from being entitled to claim this relief provided all other conditions of the relief are met;
• To determine whether duties performed in the ROI are “merely incidental” to duties performed outside the ROI, it is necessary to consider both the nature of the duties performed in the ROI and their relationship to the duties performed outside the ROI. It is not simply a matter of applying a days test;
• Employment income paid to a proprietary director or their spouse does not qualify for the relief.

Making a transborder workers relief claim

The relief can be claimed by either completing a personal tax return or by writing to Revenue.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars employment tax team below:

September, 2021