New Ways of Working

Explore and keep track of key legal and compliance considerations for multinational employers as new ways of working become increasingly embedded as the pandemic begins to recede. Learn more about the response taken in specific countries or build your own report to compare approaches taken around the world.

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05. What potential issues and risks arise for employers in the context of cross-border remote-working arrangements?

05. What potential issues and risks arise for employers in the context of cross-border remote-working arrangements?

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Ireland

Ireland

  • at Littler

Employees working remotely outside Ireland may create expensive tax liabilities for themselves and their employers. It’s important to be aware of these before any long-term decisions are made.

The foreign country in which the employee is working may seek to tax some or all of that employee’s income from the employment. This is based either on the fact that a substantial number of days have been worked in that other country or in some cases on the basis that the employee has become a tax resident there under local law. Further, social security liability may accrue (which is generally assessed separately from income tax).

The main concerns for employers will be whether there is an obligation to operate local payroll withholding and whether local social security rules add significantly to the wage bill. The rules vary widely between countries and, unfortunately, there is no “one size fits all” approach to managing this issue across multiple jurisdictions.

Employers will also need to consider two corporate tax risks. First, an employee working abroad may in some circumstances constitute a permanent establishment of the employer in that other country, exposing part of its profit to corporate taxes there. Second, if an Irish company has directors based abroad, there is a risk of the company also acquiring corporate residence in another country.

Last updated on 21/09/2021