Private employers on both parts of the island are increasingly reluctant to hire cross-Border workers because of complications about taxes and pensions, complicated by the growth in hybrid and remote working, a major new report has found.
Companies large and small “appear to be struggling” to comply with rules, according to a study of the all-island labour market commissioned by the Labour Employer and Economic Forum Shared Island Working Group.
Workers living in the Republic but working in Northern Ireland run foul of tax rules if they work at home at all, even to handle out-of-work calls, the report makes clear. But many workers are unaware of the rules.
Derry-based US insurer Allstate, which has campaigned for changes, said a quarter of its Derry workforce lived in Donegal seven or eight years ago: the number has fallen to just 7 or 8 per cent now.
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To comply with the tax rules, Northern employers have been forced to order Republic-based staff back into the offices in Northern Ireland, a move which has been deeply unpopular with many and has led people some to quit their jobs.
Currently, about 25,000 people work for organisations across the Border from their homes. That includes those in public service, though they avoid tax and pension issues under an Anglo-Irish double tax agreement. That accord excludes private-sector workers.
“Small businesses and cross-Border employers must comply with complex taxation rules designed for large, international operations,” said one of the report’s authors, Rose Tierney, a Monaghan-based tax accountant. “For workers who live on one side of the Border and work for an employer on the other side, the complexity of dual payroll and the lack of pension tax relief are difficult and costly for both employers and employees to navigate.”
Despite the talk of ever-closer connections, the numbers of people crossing the Border for work is falling, except for those in public services, says Ibec executive director Fergal O’Brien.
“People are quitting jobs [in the private sector] because of being mandated to return to the office and new ones aren’t being hired because it’s too problematic,” he told The Irish Times.
Border companies especially would be much better able to grow if they had unimpeded access to talented staff on both sides of the Border, said the report, which was funded by the Government’s Shared Island Unit. “The challenge of retaining existing businesses and skills pools, alongside aspirations to attract new businesses, jobs and talent weighs heaviest on Border counties,” the LEFF report said.
Workers living in the Republic but working in Northern Ireland have for years availed of Transborder Workers’ Relief to pay taxes to the UK’s Revenue & Customs, without a further Revenue Commissioners tax bill if that is their sole source of income.
However, they are not able to claim the relief if they do any work for their Northern Ireland-based employers from their homes in the Republic since exemptions brought in during the Covid pandemic have lapsed.
Some employers now report they find the rules “so challenging that they had made the decision not to employ cross-Border workers”.
“Several international companies highlighted that the impact of such decisions and the resulting smaller labour pool made it more difficult to compete with other sites within their parent company for investment/expansion,” said the report.
