Non-Resident Taxation Duties in Ireland

Non-Resident Taxation Duties in Ireland

 

In this piece, Stephen Kinch breaks down Revenue’s tax requirements for people and companies who are non-resident in this country. We hope you find it helpful, if you need more information or you have more questions, please get in touch -info@kalcaccounting.ie

 

Overview


In Ireland, a company is bound to withhold and pay the payroll taxes of an employee.

For a non-Irish company performing any duties in Ireland, a liability for that company to deduct and pay Irish income tax could potentially arise.

 

 

When is my company not obliged to deduct and pay income tax in Ireland?


 

Revenue will not require a non-Irish employer to operate PAYE for their employee when the following criteria are satisfied:

1) The employee is resident in Double Taxation Agreement (DTA) State and not resident in Ireland

2) There is a genuine foreign employment

3) The individual is not paid by, or on behalf of, an Irish Permanent Establishment

4) The employment that is performed in Ireland is for 60 working days or less in total in a tax year

 

 

What if the employment in Ireland lasts longer than 60 working days?


 

If the employee is in Ireland for more than 60 days, the non-resident company must register in Ireland as an employer to operate PAYE. There may be no requirement to operate PAYE in Ireland subsequent to this, provided conditions 1 -3 are met above AND provided the non-resident company meets the following criteria;

  1. The employment that is performed in Ireland is for 183 working days or less in total in a tax year
  2. The non-resident company maintains a record of the full name, latest Irish address and overseas address, date of commencement and cessation of individual, location where individual carries out duties of temporary assignment and amount of earnings in relation to temporary assignment
  3. The non-resident company signs a written acknowledgement that in all cases where a liability is subsequently found to arise, they will pay any Irish PAYE that should have been paid
  4. The non-resident company supplies evidence that PAYE is being operated in the foreign DTA state on the duties performed in Ireland (Payslip/statement)
  5. The non-resident company supplies a copy of the contract for services showing the engagement in Ireland
  6. The non-resident company seeks clearance from Irish Revenue Commissioners by 21 days after the date the assignee takes up the duties in Ireland

 

If the above criteria are met, written confirmation will be provided from the Revenue Commissioners.

Only in the case that written confirmation is provided as per the above, the non-resident company does not need to operate PAYE. Once the engagement in Ireland is complete, the non-resident company will cease their tax registration as an Employer for PAYE in Ireland.

If the above criteria are not met, PAYE must be operated by reference to the employee’s duties performed in Ireland.

If the duties performed by the employee are performed in Ireland for more than 183 days, Irish PAYE MUST be applied.

 

 

 

 

What if the employment in Ireland lasts longer than 183 days?


 

For any presence in Ireland for more than 183 days, non-resident companies run the risk of becoming tax resident in Ireland.

If a foreign company is centrally managed and controlled in Ireland, it is resident for tax purposes.

 

The central management and control test

In deciding whether a company is tax resident, Revenue will consider the highest level of control to decide where central management and control exists. Certain critical questions are included in this assessment to discover where:

  • company policy is decided
  • investment decisions are made
  • major contracts are defined
  • the company’s head office is located
  • the majority of directors live.

 

A high number of UK contractors are starting to take overseas contracting roles in Ireland. The majority of UK contractors are sole director’s in their Limited Company and are the only employees carrying out performance duties. If they are looking at contracting in Ireland for more than 183 days, a case by case basis to determine their companies tax residency will need to be reviewed. Particularly in the case that they renew a contract in Ireland, most of their contract work will now be defined in Ireland. Each case will need to be reviewed and the central management & control test will need to be applied.

 

For more information contact Stephen Kinch on 01 8084191.