Remote working in Ireland for overseas employer – should you pay Irish tax?

Consulting Taxes
November 21st, 2020
Written by: admin

Remote working in Ireland for overseas employer – should you pay Irish tax?

We often are approached by clients who need assistance with their taxes when they are working remotely for an overseas employer. They are confused.

Where should they pay tax?

What if the employer continues to withhold tax in their country?

Do they need to lodge an Irish tax return?

So what are the Irish tax implications of working remotely for an overseas employer?

We plan to expand on this post in the coming weeks but for now, the below is a summary:

  • If you are carrying out your duties in Ireland (remotely) you are taxable on the income arising from those activities unless it is relieved under a Double Tax Agreement.
  • Generally speaking, your employer is obliged to register for PAYE withholding and withhold Irish tax from your salary (there are some circumstances where this is not the case e.g. where you have a limited number of workdays in Ireland)
  • In practice this means the employer needs to register with the Revenue Commissioners to withhold from you and pay this tax across to the Revenue Commissioners each month
  • Understandably some employers are reluctant to do this if you have elected to work remotely in Ireland rather than being asked to come here to do so
  • It is important to determine between your employer’s obligation to withhold and your obligation to pay tax
  • Even if your employer does not withhold from you, you may still have an Irish tax liability on your foreign employment income
  • Bear in mind also your employer may intend to continue to withhold tax from you in the foreign location and you may continue to be taxable in that location. Relief under the Double Tax Agreement may be available.
  • As always the facts and circumstances of each case differ – get in touch with us so we can help you determine how to comply with your taxes while working remotely.

    COVID – 19

    In light of the recent Covid 19 crisis it is common that more people are required to work remotely. They may be here in Ireland working when they would normally be overseas. Revenue have confirmed that they will not seek to enforce Irish payroll obligations for foreign employers in genuine cases where an employee was working abroad for a foreign entity prior to COVID-19 but relocates temporarily to the State during the COVID-19 period and performs duties for his or her foreign employer while in the State.

    Additionally if an individual is close to triggering tax residency in Ireland and was required to remain in the state because of the Covid 19 crisis such that they become tax resident Revenue have confirmed they will not count these days for the individual (i.e. tax residency may not be triggered when it normally would have if it were not for Covid 19).

    Recent Revenue Guidance has been issued outlining what days in 2020 Revenue will disregard for the purposes of determining tax residency. The guidance per the attached will be of interest in this respect.

    covid-19-statutory-residence-test

    DISCLAIMER

    The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice. No liability whatsoever is accepted by Expats Taxes for any action taken in reliance on the information in this article

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    Stephanie Wickham

    Stephanie is an award-winning international and expatriate tax specialist with over a decade’s experience. She is a KPMG trained Chartered Tax Adviser and Chartered Accountant.

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