Private employers on both parts of the island are increasingly reluctant to hire cross-Border workers because of complications about taxes and pensions, hugely complicated by remote working demands, 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 (LEEF) 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 if they handle out-of-work calls from their home, the report makes clear, but many workers are unaware of the rules.
However, Derry-based United States insurer Allstate, which has campaigned for changes, said a quarter of its Derry workforce lived in Donegal seven, or eight years ago, but the number has fallen to just 7 or 8 per cent now.
Number of cross-Border workers falling because of tax and remote working rules
Inside Sinn Féin in the North: How it has moved from crisis to war footing for the ROI general election
Protestants in Ireland: ‘We’ve gone after the young generations. We’ve listened and changed how we do things’
There’s an air of autocracy about some of Sinn Féin’s recent pronouncements
Northern employers have been forced to order Republic-based staff back into the offices in Northern Ireland to comply with tax rules, which is deeply unpopular with many and has led some to quit.
Currently, about 25,000 people are working for cross-Border organisations, including those in the public service, though the latter avoid tax and pension issues because of an Anglo-Irish double tax agreement, but it 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 on this island 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,” she said.
Despite the talk of ever-growing connections, the numbers working cross-Border is falling, except for those employed in public services who are covered by the double taxation agreement, 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 firms, 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 pool, alongside aspirations to attract new businesses, jobs and talent weighs heaviest on border counties,” the LEFF report said.
Cross-Border employment “is not straightforward” and requires accurate information, but often firms “do not know what question to ask, let alone know which answer is right”, said Tierney.
Workers living in the Republic but working in Northern Ireland have for years used the Transborder Workers’ Relief (TBWR) paying 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 TBWR relief if they do any work for their Northern Ireland-based employers from their homes in the Republic – including after-work calls, since exemptions brought in during the Covid pandemic have lapsed.
Some employers now report that they are “starting to find” the rules to be “so challenging that they had made the decision not to employ cross-Border workers,” reducing their labour pool.
“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.
