As our clients expand abroad or move into Ireland, we advise on the tax issues associated with either posting key employees abroad or assigning executives or employees to work in Ireland.
Below, we have listed some of the topical issues that arise and which we advise on:
Assignments into Ireland
- Where an employee will be temporarily working in Ireland, is there a requirement for the employer to operate Irish PAYE on all or part of the salary?
- Will the employee become Irish tax resident and what are the implications/opportunities that may arise?
- Should the employee pay social security in the home state or Irish Social Security?
- Can Special Assignee Relief Programme (SARP) apply, with the result that there is a reduction in the employee’s charge to Irish income tax on remuneration?
- Does the situs of the employee in Ireland create a broader issue for the company – does it now have a taxable presence in Ireland?
Assignments out of Ireland
- Can a PAYE Exclusion Order be obtained which means that Irish PAYE no longer has to be operated on the employee’s salary payments?
- If payroll taxes have to be applied in both jurisdictions, can a Double Deduction application can be made to ensure that the employee is granted a tax credit through the Irish PAYE System for non-refundable foreign tax withheld?
- Is it possible to make an application to Irish Revenue for Split Year Residence Relief (this could result in a tax refund for the employee)?
- Will the employee become tax resident abroad and what are the implications/opportunities that may arise?
- Can the individual claim expatriate tax incentives including the Foreign Earnings Deduction (FED) and Cross Border Worker (Transborder) relief to reduce Irish tax on income?
- Do the employees wish to elect to continue to pay Irish PRSI on a foreign assignment, whose salary is not subject to Irish PAYE (we have vast experience in liaising with the Department of Social Protection in applying for Certificates of Coverage (E101/A1 Certificate)?
- Will foreign payroll taxes need to be applied?
- Does the employee’s presence in the foreign jurisdiction create tax issues for the employer (e.g. taxable presence issues abroad for the company can be an issue, particularly if the corporate tax rate is higher than in Ireland)?
Returning to Ireland
Numerous issues can arise when the employee returns to Ireland e.g. does the PAYE Exclusion Order need to be cancelled and the employee put back on the Irish payroll?
In addition to the above, generic issues arise, such as:
- The tax implications of relocation packages provided to the seconded employee, including the provision of accommodation in the foreign jurisdiction.
- The tax treatment of share based remuneration
- Tax equalisation.
As you can see, the tax issues arising in relation to inbound and outbound assignments are vast and varied.
At Warren & Partners, we have many years of experience handling all of the above tax matters for the employer, the executive and the employee.