State's tax rates a ‘major disincentive’ for remote workers, says Varakdar

Ireland's personal tax rates will be a "major disincentive" when competing for highly mobile remote workers, Tánaiste Leo Varadkar has said.

The Minister for Enterprise, Trade and Employment said the State needed to “face up to that reality” or see high-paying jobs and associated tax revenues lost overseas.

"Remote working presents huge opportunities as well as risks," Mr Varadkar told The Irish Times on Friday. "If you can remote work for a big company from your home in rural Ireland you can also from an island in the Mediterranean," he said, adding there are 50,000 remote jobs currently on offer in Europe. "We need to make sure Ireland gets its fair share of those jobs and some."

“Remote working is a reality now though and we need to adapt to it and embrace it.”

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‘Smart policy’

Ireland has attracted investment “through smart policy decisions”, he said. “In a world in which investment, wealth and talent are increasingly mobile, we will have to consider how to retain and attract talented people who, more and more, will be able to choose where they base themselves.

“Our higher personal tax rates are a major disincentive in this regard and we will have to face up to that reality or we will be forced to by the loss of high-paying jobs overseas and the tax revenues associated with them.”

He said Ireland should be attractive in “non-financial ways like more liveable cities, good education and a family-friendly environment, culture, security and the availability of quality housing.”

Facebook example

Mr Varadkar was speaking as Facebook outlined plans to allow its workers – including those based in Ireland – work abroad for 20 days a year. Some employees will be able to work full-time abroad from next year, although that will not be available to all those working in Ireland.

Location-specific roles in areas like data centres will have to remain here, while tax and compliance issues will also restrict mobility.

Gareth Lambe, head of Facebook in Ireland, told RTÉ on Friday that he anticipated employees would typically spend 50 per cent of their time at home and 50 per cent in the office.

Eligible Facebook Ireland employees can relocate full-time to France, Germany, Spain, Italy, Poland, the Netherlands and the UK.

Government sources said the full implications of the Facebook decision would only become clear in time, acting in concert with other post-pandemic changes and international tax reform. “The big takeaway is the business model will definitely have to change,” a source said.