I live in Co Louth and travel to Armagh daily to work in my own business, which is in Armagh. I have heard there is a relief for Irish residents working in Northern Ireland – can I claim this?
Transborder workers relief is a relief for people resident in the Republic of Ireland who work and pay tax in another country, in your case Northern Ireland. The relief can be claimed if you travel daily or weekly to your employment in the north with the result that you will only pay tax in Ireland on any income you earn in Ireland. This means that there would be no Irish tax liability or Universal Social Charge on the salary although it should be noted Irish tax will still arise as usual on other sources of income.
To qualify for the relief, you must be tax resident in Ireland, work for an employer in a country that Ireland has a double taxation treaty with, have paid tax in the other country, are not due a refund of this tax and be present in Ireland for at least one day for every week you work outside the state.
Ireland and the UK have a double taxation agreement and you satisfy the other 3 conditions but unfortunately you cannot avail of transborder workers relief if you or your spouse are proprietary directors of the company you work for. A proprietary director is a share holder owning at least 15% of the share capital of the company and therefore for Irish tax purposes you treated as self-employed, rather than employees.
As you cannot claim transborder workers relief, your salary will be subject to income tax and USC calculated for the corresponding Irish tax year, with double taxation relief available for the UK tax paid on the same income. To avail of this a self-assessment tax return declaring the Northern income should be submitted to Irish Revenue.
As USC will be chargeable at rates up to 8% in addition to tax at 40% there may be a balance to be paid to Irish Revenue where the UK tax is less than what would have been payable under the Irish tax calculation. You should take care when claiming these reliefs that the UK tax year runs from 6 April to 5 April each year with filing on 31 January while the Irish tax year is from January to December with submission by the 31 October the following year.
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