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Q. I am a company based in Ireland and I want to hire a Northern Irish (NI) resident to work on NI projects. What payroll should they be on?A. If an Irish branch/subsidiary were to employ a NI resident staff member to work on NI projects, the NI employee would not be liable to Irish PAYE if his/her duties are wholly preformed in NI. Instead they should avail of the ‘Direct Payment Scheme’ in the UK whereby the employee who is UK resident registers for UK PAYE on behalf of the Irish Branch/Subsidiary. The employee would then account for UK PAYE and employees National Insurance Contributions (NIC).
The Irish branch/subsidiary may pay over the tax and NIC on the employee’s behalf by completing the necessary slip and returning the tax to the HMRC www.hmrc.gov.uk on behalf of the employee and then pay the employee the net amount.
Please note, however, that if the employee is required to work in Ireland (which includes any periods of training), the Irish company would also be required to include him/her on their Irish payroll and account for Irish PAYE for the days worked in Ireland and on the UK payroll continue to account for UK PAYE and NIC for the full week. This arrangement is known as ‘Net of Foreign Tax Credit Relief’.
Double taxation relief would be available for any amounts taxed twice via a tax credit given on the UK payroll for the Irish tax deducted from gross wages and paid over to the Revenue Commissioners. However, this is limited to the amount of UK PAYE payable and prior permission to operate the scheme is required from HMRC.
Pay Related Social Insurance (PRSI) in Ireland would not be required to be paid as NIC would be paid in the UK.
InterTradeIreland are confident that the information and opinions contained in this Q&A section have been compiled or arrived at by the authors from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made to their accuracy completeness or correctness. All opinions and estimates contained in this Q&A section constitute the authors judgment as of the date (31st December 2010) that the Q&A’s were compiled and are subject to change without notice. This section is intended to provide general information to its readers. It is not intended to provide a comprehensive statement of the subject matter and does not necessarily reflect the views of InterTradeIreland. While care has been taken in the production of the Q&A’s, no responsibility is accepted by InterTradeIreland for any errors or omissions herein.”