With companies like Facebook allowing its Irish-based workers to do their jobs from anywhere, those wishing to work remotely from abroad could face a variety of tax-related obstacles
NOW we have a choice, and it seems like the decision to be made is a no-brainer.
You can continue working in Ireland, where the rents are sky-high, the cost of living is off the scale and the rain is incessant in winter.
Alternatively, the possibility is now opening up that you can continue working for your Irish employer, but base yourself abroad, maybe in sunny Spain, where the cost of living is reasonable, the wine is good value and the lifestyle is agreeable.
But is it really as simple as choosing to work remotely in a sunny spot, if your employer will allow it, or is there more to the decision than it seems at first?
The decision by Facebook to allow employees at its Irish office to work from abroad is expected to be followed by other companies.
This opens up the prospect of Irish people swapping high-cost Ireland for the likes of the South of France, or even a sandy Caribbean island.
Employment law solicitor Richard Grogan said the “floodgates have opened” as a result of Facebook’s announcement.
He said this week that other multinationals are likely to facilitate employees working remotely from other jurisdictions.
But the move is set to be a “nightmare” from an employment law point of view, he told The Irish Times.
But how would it work, in practice, for someone working here for an employer based in this country who decides to up sticks and work remotely for that same employer?
For the employee, the big factor is tax. What matters with tax is where the worker will actually reside, and not where they are employed.
“It is complicated,” is the initial reaction of Norah Collender, who is tax technical manager with Chartered Accountants Ireland.
She says there are taxation obligations for the employer and for the employee in such a remote working situation.
An individual is subject to taxation in Ireland if they are tax resident in Ireland, she says.
The key determinant is how many days they are in Ireland in any given year.
The rules state that if you spend more than 183 working days in a year, or 280 over a two-year period, working outside Ireland then you are not tax resident here.
This means that an Irish person living in Spain will be tax resident in Spain. But the Irish employer may then have a responsibility to file a tax return in Spain and pay payroll taxes there.
There may be taxes arising in both Ireland and Spain over a transition period.
Consumer tax manager with Taxback.com Marian Ryan says they could claim a deduction on their Spanish return for their taxes already paid in Ireland.
“It's not as simple as just moving country and still getting paid by their employer. They would need to file returns and pay taxes in both their country of employment and country of residence.”
Then, to make things more complicated, if they are a US citizen they have to file a US return, regardless of where in the world they are.
Ms Collender warns: “Working remotely from outside this State for an Irish-based employer is a nice idea, but there are lots of issues.”
And she warns that this country could lose out on corporate tax revenue, as one of the criteria for determining if a company should be taxed here is “having people on the ground”.
The advice of both tax practitioners is to get advice.
There may be issues to sort out, but none of them are insurmountable.
This means that the dream of earning an Irish salary while working from a beach hut in Barbados is not out of the question, but is also not straightforward.
It seems that the pandemic has opened up some exotic options we never thought would be available.