Case Study 9

My family home is in Dublin but I have recently started to work for a large Belfast based company. I live in a rented flat in the city during the week. I perform all my employment duties in Northern Ireland or the UK. What are my tax responsibilities?

Cross-border workers like yourself are people who regularly travel from one country to another to work. For example, someone who lives in the Republic of Ireland but travels to work in Northern Ireland.

The first thing you need to do is to consider the rules for residence in each country you either live or work in. You may have to pay tax in both the UK and Ireland. As such, you will probably have to look at the double taxation agreement between the two countries.

One of the functions of the treaty is to prevent double taxation by ultimately allowing only one country to tax your earnings or by allowing a credit for the foreign tax paid. The method of double taxation ‘relief’ will depend on your exact circumstances, the nature of the income and the specific wording of the treaty.

As a cross-border worker you are typically obliged to pay income tax in the country where you earn your employment income, but your ultimate tax responsibility is with the country where you live, so you must submit an annual tax return each year.

As a Republic of Ireland resident working in the north you will have income tax deducted automatically from your salary under PAYE and paid directly to HMRC. You will also be obliged to submit an annual self-assessment income tax return declaring your foreign income to the Republic’s tax authorities.

A point worth noting is that there is no such relief for cross-border workers resident in Northern Ireland, who work in the Republic, so their annual self-assessment tax return to HMRC may result in a top-up UK tax liability.

The rules are complicated regarding the social security position when individuals are working both in the UK and another country within the European Economic Area (EEA), for example when someone lives in the Republic but works in Northern Ireland and specialist advice should be sought.

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Updated January 2017