An individual is a cross-border worker if they work on one side of a country border but live in another and return home at least once a week. Many workers from Northern Ireland travel to the Republic of Ireland daily for their employment. These workers have rights in their country of employment but are also subjected to the tax rules of their country of residence.
Double Taxation Relief
Cross-border workers, also known as frontier workers are obliged to pay income tax in their country of employment but also in the country in which they live.
NI residents working in ROI will have income tax deducted automatically from their salary and paid directly to the Revenue in the ROI. They will also be obliged to submit an annual self assessment income tax return declaring their foreign income to HMRC. NI resident frontier workers may have a balance of UK tax to pay to HMRC if they are taxed less in the ROI than they would have been if they had paid tax on the sterling equivalent of this income in the UK.
Married Tax Credits
In the ROI, tax credits reduce the amount of Irish income tax that a taxpayer pays in a given year. Married couples benefit from a higher tax credit of €3,300 compared to the current €1,650 of a single person’s tax credit. It is often therefore beneficial for a frontier worker to claim the married tax credit.
If one spouse works in ROI and the other has no income, the married tax credit will be given accordingly. However, if both spouses work, with one working in NI and one working in ROI, the ROI employee will be taxed as a single person and at the end of each tax year, a refund of tax may be due when both spouses total income figures are provided to the Revenue Commissioners.
Mortgage Interest Relief
Cross-border workers can also benefit from the mortgage interest relief available through the Irish tax system. If your home is in Northern Ireland you can claim tax relief via your employer’s PAYE system therefore allowing you to take home more wages instead. To qualify for this relief, mortgages must have been taken out between 1 January 2004 and 31 December 2012. There are different rates of relief available depending on what year you initially took out your mortgage.
Cross-border workers with dependent children can benefit from EU regulations in relation to Child Benefit. The country of employment of the parents generally pays the family benefits even though the family may reside in another EU member state. If a family reside in NI with one parent employed or self-employed in NI and the other in ROI, NI pays the family benefits and ROI considers a supplement payment. A supplement payment is the difference between the total amount of family benefits payable in the UK (Child Benefit and Child Tax Credit) and ROI (Child Benefit).
This can be highly beneficial to parents not in receipt of Child Tax Credits as the rate of Child Benefit in ROI is more generous than that in NI.
Social Welfare Payments
As a cross-border worker, employed or self-employed, your social security rights mainly depend on the country where you work. You enjoy the same rights as your colleagues with regard to sickness benefits, maternity and paternity benefits, invalidity, old-age and survivors’ pensions, insurance against accidents at work and occupational diseases, death grants, early-retirement and family benefits.
There are special rules for frontier/ cross border workers claiming job seeker benefits:
* Frontier workers who are wholly/fully unemployed, e.g. made completely redundant, receive benefits in the state in which they live.
* Frontier workers who are partially or intermittently out of work (e.g. reduced working hours) receive unemployment benefits in the state where they were last employed.
* In the absence of any contractual link with the employer they are treated as fully unemployed.
* Where there is no resumption date they are treated as fully unemployed.
The rules regarding cross-border working can be complicated therefore it is advisable to seek information based on you and your family’s particular circumstances.