UK/ Irish Ltd companies

[Sue B]

Well, its not really written from the point of few of removing a tax liability. Its a Statement of Practice, relating to the scope for applying PAYE, it doesn't change the OECD model of Double taxation, but it does make concessions on when the employer is or is not obliged to run PAYE on certain income.


Under section 4

4.2 Temporary Assignees
4.2.1 Short term business visits to the State – not more than 60 working
days
Under the terms of the Employments Article of Double Taxation
Agreements (DTAs) between Ireland and other countries, the income
attributable to the performance in the State of the duties of an
employment may be relieved from the charge to Irish tax and where this
is the case the tax deducted under PAYE is refundable to the individual
from whose income the tax was deducted.
In certain circumstances, Revenue will not require an employer to operate
PAYE where, under the terms of a DTA, a taxing right on remuneration
paid by the employer is not allocated to this State. Revenue are prepared
to accept that employers need not operate PAYE on remuneration paid to
an individual where -
(a) the individual is resident in a country with which the State has a
Double Taxation Agreement and is not resident in the State for tax
purposes for the relevant tax year; and,
(b) there is a genuine foreign office or employment; and
(c) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the State, and
(d) the remuneration is not borne by a *permanent establishment* which
the employer has in the State and,
(e) the duties of that office or employment are performed in the State for
not more than 60 working days in total in a year of assessment and, in
any event, for a continuous period of not more than 60 working days.

Here, it is still referring to the DTA to decide the taxation order, and part 4.2.1 makes reference to the requirement that the remuneration is not borne by an entity with a Permanent Establishment in Ireland.

This statement on the whole feels very similar in lots of ways to the UK Agency Legislation, which again does not remove a workers liability to income tax and national insurance in the UK but does detail who is responsible for operating PAYE.

[m0n1k3r]

If it's only for six months don't forget that there is no personal Irish tax liability if you are not physically present in Ireland for more than 183 days.

Or for 280 days over two years (which is still better than UK's rules).

[m0n1k3r]

TCP and NLDUK - absolutely this.

Technically, there is no 183 day "rule", its is part of the DTA article relating to income from employment and comprises 3 tests, all of which have to be satisfied in order for it to apply.

Most contracting personnel who pass part a (days in country) go on to fail parts b and c, which relates to where and from whom was income derived.

There is an 183 day rule, but it is not generally applicable to contractors. It is applicable, for example, to ordinary employees being sent by their employer to do certain project or installation work for a customer. If you are a director, you will effectively create a fixed establishment of the company in that other country.

As a director working abroad, always use an umbrella, or set up a proper company in that other country (but it's not worth doing it if your only objective is to transfer all of the money into your own pocket in the most tax efficient way possible).

The rule is also contingent upon the worker sent being purely managed by his/her employer abroad. If there is any element of temporary staffing/contingent labour/staff augmentation/labour leasing (which, frankly, most contractor contracts have) then it doesn't apply and PAYE should be operated locally.

[m0n1k3r]

Me too. Lots of UK contractors in Ireland seem to get away with it and are even advised that it's OK, but I am fairly sure that you must pay full Income Tax, PRSI and USC on all income arising from work undertaken in Ireland.

Yes, but unless there are elements of control involved, there is a difference between company revenue and personal income.

[Sue B]

Indeed there is Moniker, and its important for contractors to remember that these will always be treated differently within the DTA. Business profits may be taxed in Ireland (as much as is attributable to the Permanent Establishment).

And Permanent Establishment of the company is normally day 1, due to the company have a placement of management (i.e. the director) in Ireland.

[TheCyclingProgrammer]

And Permanent Establishment of the company is normally day 1, due to the company have a placement of management (i.e. the director) in Ireland.

What if you have two directors (e.g. a spouse), with the latter still residing in the UK at the company registered address?

[Sue B]

What if you have two directors (e.g. a spouse), with the latter still residing in the UK at the company registered address?

You still have a place of management in Ireland.

[SueEllen]

What if you have two directors (e.g. a spouse), with the latter still residing in the UK at the company registered address?

In Eire you use to be able to get away with it if the majority of the management were outside Eire e.g. 2 out of 3 directors but they changed that around 2010.

Now if you contract in Eire you need to pay both company and personal taxes there, and there are no loop holes.