Transborder Workers’ Relief for Irish Commuters | Expat Taxes

Transborder Workers’ Relief — A Tax Relief for Commuters

With so many businesses diversifying to remain competitive, employees are now expected to be more flexible than ever. Even with the rise of remote working and virtual meetings since the Covid-19 pandemic, there is still a cohort of workers that regularly need to commute across borders to satisfy their job requirements. With high living costs in certain cities also making it difficult for some employees to live where they work, travelling for work can sometimes be a necessary solution.

But what are the tax implications if you’re resident in Ireland and earn income outside of the State? 

If you are resident and domiciled in Ireland for tax purposes, you are generally liable to pay tax in Ireland on your worldwide income. However, with modern working conditions not always making this process as straightforward as it sounds — it’s good to be aware of potential exemptions or deductions that may apply to your situation.

For example, for those living in Ireland with employment income from a foreign source, you might qualify for transborder workers’ relief (or ‘cross-border workers’ relief’ as it is sometimes referred).

For those unfamiliar with this form of tax relief, our team of advisors is here with their insights to help you discover its relevance to you.

Let’s get started.

What is transborder workers’ relief?

Transborder workers’ relief is a type of tax relief that was established to help Irish tax residents avoid double taxation between two countries. It generally applies to those with a permanent address in Ireland, but who travel daily or weekly to another country for work. For commuters or ‘cross border workers’, the relief aims to ensure that tax in Ireland and foreign tax aren’t due on the same income. 

Who can qualify for transborder workers’ relief?

Understanding your entitlement for Irish tax relief can be tricky without the right guidance. Especially for those with foreign employment income, getting the information you need from relevant authorities can be an overwhelming process. This is why we always recommend speaking with a tax advisor or expert before making assumptions about your entitlements or how foreign tax should be paid.

The good news is that with transborder workers’ relief, a certain criteria exists to help you determine if the relief is worth investigating. 

This criteria is as follows:

• You must be tax resident in Ireland
• You must work in a country with which Ireland has a double taxation agreement
• You must be present in Ireland for at least one day for every week you work abroad
• You must have paid tax in the country you’re working in and are not due to be refunded this tax
• Your qualifying employment must be held for a continuous period of 13 weeks in the year

If you meet the above criteria, it is certainly worth investigating whether you qualify for the relief. 

As always, a reputable tax advisor can provide further information before you submit a self-assessment tax return. 

Who won’t qualify for transborder worker’s relief in Ireland?

Even if you meet the requirements set out above, not all transborder workers are guaranteed to qualify for this type of workers’ relief.

This might be due to you already receiving:

• Split year treatment
• Seafarers’ Allowance
• Foreign Earnings Deduction (FED)

Note: It is also not possible to claim transborder workers’ relief if you or your spouse or civil partner are directors of the company you work for abroad.

Can I claim transborder workers’ relief if I commute to Northern Ireland?

At present, Ireland has a Double Taxation Agreement in place with the UK. This means that a cross-border worker commuting from Ireland to Northern Ireland for work purposes may be entitled to apply for transborder relief.

To find out which other countries Ireland has a double taxation treaty with, you can visit Revenue’s country guide.

What type of employment will be considered for transborder workers’ relief?

Aside from the country you’re working in needing to have a double taxation treaty with the Irish State, your type of career should not impact your entitlement to transborder workers’ relief.

That said, it is important to remember that your foreign income will only qualify for transborder workers’ relief if you are a tax resident of Ireland. 

To be considered a resident in Ireland for tax purposes, you generally need to be present in Ireland for:

• 183 days or more in a tax year

or

• 280 days or more in total (taking the current tax year plus the preceding tax year together)

As mentioned, qualifying employment must also be held for a continuous period of 13 weeks in the tax year.

Does everyone benefit equally from transborder relief?

Transborder workers’ relief helps eliminate the risk of paying tax to two different authorities on the same income. The relief effectively removes earnings from qualifying foreign employment from liability to Irish tax, but only on occasions where foreign tax has been paid on those earnings (and is not refundable). 

In simple terms, the effect of the relief when claimed is that Irish tax will generally only arise where the individual has income other than income from a foreign employment.

For example, if you have investment income from a rental property in Ireland, this will remain taxed in Ireland even if the relief is granted. The relief will remove/reduce Irish liability to tax on your foreign employment income only.

Note: You will not receive any credit for foreign tax paid if you qualify for transborder relief.

How to apply for transborder workers’ relief

To apply for transborder workers’ relief, you should apply through your local Revenue office. 

Transborder workers should also be aware that processing times for any kind of tax relief applications in Ireland can vary. This is why it’s important to have your documents prepared in advance if possible.

For example, a transborder worker’s relief application will require you to have:

• A PPS number (the Irish equivalent of a social security number)
• Other relevant tax details clearly in order (you can ‘review your tax’ by logging into MyAccount on Revenue’s website)
• A final statement of Income Tax liability from the country you work in

How Expat Taxes can help:

When handling tax matters, we always suggest speaking with a tax advisor who can ensure you’re being matched with the right information for your specific needs. Despite certain reliefs seemingly applying to large groups of people, it’s always worth investigating tax compliance and possible entitlements on a case-to-case basis.

Working with expats moving to and from Ireland, as well as individual and commercial clients all over Ireland and abroad, Expat Taxes specialises in helping you clarify your tax situation. 

Offering assistance with everything from tax compliance to helping you prepare for the future, we offer a wide range of services and niche consultations to help you save money and resolve any tax matters weighing you down.

Book a consult with a member of our expert team today.

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 or refraining to act. 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 or any of the articles in our blog series.