Ireland's top professional contractors 'more likely to work abroad' unless tax anomaly addressed
Specialist contractors are calling for an anomaly in Irish taxation to be addressed in the forthcoming Budget that currently makes it 'more advantageous' for Ireland’s top professionals to work abroad.
Independent engineers, project managers and tech professional are currently not allowed travel and subsistence expenses for tax purposes, while employees in similar roles can reclaim the costs tax free.
Commercial Director at Contracting PLUS Jimmy Sheehan said that these independent professionals (iPros) are at a disadvantage.
"An employee receives these expenses tax-free, public servants and public representatives receive these expenses tax-free. But bono fide expenses incurred by iPros in relation to travel and subsistence which are wholly and necessary for business purposes, are being disallowed," he said.
Regularly engaged by Ireland’s major multinationals, iPros are often based beyond what would be deemed a normal commutable distance.
The travel costs incurred on a major contract over the course of 6 or 12 months can be quite sizeable, so not being allowed to claim mileage and subsistence can really put the professional off taking on a project, the independent contractors advisor maintains.
"A lot of Ireland’s foreign direct investment is attracted on the basis of our skilled, educated, English-speaking workforce, available to support the set-up of incoming multi-nationals with specialist skills," Mr Sheehan said.
"Therefore, professional contractors unwilling to take on roles in projects where they incur travel expenses will have larger consequences for Ireland Inc."
An employee is not allowed to claim travel expenses to and from work, and it is this basis that currently prohibits an iPro from claiming any mileage to his or her place of work.
While the average commute to work in Ireland is 15km, if an employee travels to a client premises, 50km away for example, they can claim mileage of 35km (50km less the distance to their 'normal' work place).
However, according to Mr Sheehan, iPros cannot claim any mileage or subsistence, regardless of where they travel across the country and how long they stay away from home.
"Ireland’s iPros pay their taxes, make a job for themselves and for others too, and their expertise is a major draw for MNCs with crucial project based work," he said.
"Similarly, they support small and mid-sized companies that want specialist services for a duration, or for a specific project, but cannot engage them full time."
The sector is calling on Finance Minister Paschal Donohoe to put for a solution on October 9 based on the model used in the US Canada, Germany and the UK, "Tax Home", which looks more favourably on the independent professional and costs incurred.
Contracting PLUS, together with the PCSO (Professional Contractors Services Organisation) has been pushing for change in this area for several years.
The availability of skilled expertise on a pay-as-you-go basis is a well-documented driver of innovation and job creation in Ireland, according to Mr Sheehan.
"Forcing this cohort to ply their specialist trade overseas in other tax jurisdictions is not benefitting Ireland Inc in any way, and can only have a detrimental effect," he said.