Undoubtedly over the past number of years, there has been a substantial increase in remote working and in employees seeking to work from locations where the employer has no corporate or legal presence.

The taxation of globally mobile employees can often be overlooked and many employees/employers may not be aware that where a non Irish tax resident employee who holds a non Irish employment, works in Ireland on a temporary basis, Irish PAYE implications can arise for the foreign employer.

Under domestic Irish tax legislation, where an employee of a foreign employer woks in Ireland under the terms of a foreign contact of employment, the foreign employer is obligated to register for and operate Irish payroll taxes on the employment income referrable to the Irish employment duties.

However, notwithstanding the domestic legislative position, Revenue practice, will allow a foreign employer to be released from its obligations to operate Irish PAYE in certain circumstances.

A number of factors are taken into account in determining whether there can be a derogation from the requirement to operate PAYE including:

• The number of work days the assignee spends in Ireland.
• Has the assignee arrived from a country with which Ireland as a Double Taxation Agreement (DTA) or not.
• Does the DTA’s Employment Article allocate the taxing rights on the employment income to Ireland.

Broadly, whether there is an obligation for the employer to operate Irish PAYE depends on the employee’s number of Irish work days and are as follows:

A. Short term business visits – less than 30 Irish work days

Where the employee is employed under a foreign contract of employment and has less than 30 Irish work days, no PAYE obligation arises for the employer (whether or not the employee is assigned from a DTA country).

B. 30 or more Irish days but no more than 60 Irish work days

Where the employee is being assigned from a DTA country, generally Revenue will not require an employer to operate PAYE where an application for treaty exemption is made and the following conditions are satisfied.

• The individual is resident in a country/jurisdiction with which Ireland has a DTA and is not resident in Ireland for tax purposes for the relevant tax year.
• There is a genuine foreign office or employment (and foreign contract of employment).
• The individual is not paid by, or on behalf of, an employer resident in Ireland (the foreign employer does not have a permanent establishment in Ireland).
• The duties of that office or employment are performed in Ireland for not more than 183 days in total in a relevant period. The relevant period is determined by reference to the appropriate DTA (i.e., calendar/fiscal year or rolling 12-month period).

If the employee has more 30 plus Irish work days and is assigned from a non DTA country an Irish PAYE obligation does arise.

C. More than 60 Irish work days and not more than 183 Irish work days

Provided the conditions outlined at B above are satisfied, if the employee is assigned from a DTA country, where there are 60 plus Irish work days (and less than 183 Irish work days), generally the employer can apply to Irish revenue for a PAYE dispensation order. This application must be made within 30 days of the employee commencing work in Ireland.

Conclusion

The assignment of employees to Ireland can result in PAYE obligations for the employer and an exposure to interest and penalties can arise where the PAYE rules are not adhered to. Our team are experts in advising on the Irish tax implications of posting high level executives to Ireland. Separately, our team has the expertise to advise senior executives on Irish tax matters relevant to them personally e.g. the remittance basis of taxation in Ireland.