Remote working brings opportunities and complexities

Address may have changed but tax obligations remain the same for relocated home workers

Remote working changed in March 2020 from a luxury for few, to a new normal for many. Caroline Crowley, Chartered Accountant and Chartered Tax Adviser at Charles P Crowley & Co in Bandon has seen a rise in enquiries, particularly from UK resident individuals relocating to West Cork and working remotely for their overseas employers.

‘West Cork offers a better quality of life to many and for those who are no longer constrained by the geography of the jobs market, their overseas employers are recognising that there are gains from facilitating remote working. While the location of work has permanently changed, the tax rules have not,’ Caroline said.

Tax Residency

As a result, many employees inadvertently established a tax residency in Ireland, exposing themselves to negative tax consequences from employment income and other events, such as capital disposals made or inheritances received.

Typically, the employee will be ultimately responsible for any personal tax declarations required.

Similarly, their employers now have payroll withholding tax obligations in Ireland which they are not always aware of, from registering with the Revenue Commissioners and more. Social security rules will also need to be considered.

Remote work became the norm for many in March 2020

Permanent Establishment

In some situations, the employee’s activities or presence in Ireland will create a ‘permanent establishment’ for the overseas employer, where profits may be taxed and the introduction of Irish tax reporting obligations.

In each case, the specific facts need to be examined to assess what tax and social security obligations arise.

Therefore, prior to any remote working arrangement being implemented, the employee should seek tax advice in light of their personal circumstances.

How We Can Help

Once employees cross borders, they can trigger multiple tax risks. We can support employees with submitting Irish and UK income tax returns and managing their personal tax obligations.

We can also support employers that may need to register in Ireland with Revenue for payroll taxes and operate payroll on their behalf.

We can provide specific tax advice where an employee is working exclusively in Ireland or where they return to their employer's country and operate a hybrid working model.

Remote working is here to stay and employers are seeing the benefits to productivity and employee-wellbeing that will endure far beyond this pandemic.

West Cork is a great place for families and remote working has the potential to bring more people back into the local communities, a multiplier which in turn creates and sustains further local jobs.

Get in touch with Caroline on Twitter, Instagram or Facebook.

Specific tax advice can be sought by contacting [email protected] or calling 023-8841899.