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Remote Working: Tax Risks and Payroll Considerations

Updated: Jan 24

Written by Cormac Kellerher, International Tax Partner, and Mairéad Divilly, Lead Partner – Outsourcing and Compliance Services, at Mazars.

COVID-19 has reshaped the working environment and stimulated a significant increase in remote working in Ireland and other countries. While the benefits of remote working are well-documented, companies must be aware of the potential Irish tax implications of having employees working remotely in Ireland and the possible tax risks of working remotely abroad.

When initially advised to work from home, employers witnessed employees relocating to a mixture of alternative Irish urban and rural locations, but equally to many European and international jurisdictions. The initial focus may have been ensuring a seamless transition from office to home, but there was little consideration given to potential tax, payroll and other HR implications.

If an Irish employer has employees working in a foreign jurisdiction, that jurisdiction may impose foreign payroll tax withholding on that employment income. The foreign jurisdiction may seek to impose this tax collection directly on the employee if the Irish employer is not tax registered in the country. As a result, there could be double taxation, employee dissatisfaction, and HR implications. The tax risk can apply to employees working remotely from Ireland for a foreign employer or employee working remotely abroad for an Irish employer. Employers should have a clear policy covering remote working to help keep the company compliant for tax purposes.

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