Expat taxes Ireland: What employers need to know before relocating staff abroad
Companies planning to relocate an employee or executive to Ireland as part of their international expansion must settle tax and payroll-related matters before the assignee arrives. This also serves to protect the company. Ecovis experts have compiled a brief guide outlining the necessary steps and considerations.
Cross-border assignments create obligations for employers and employees. Alongside the employee’s personal tax position, the employer may need to register for payroll in Ireland, review social security coverage, and understand when a withholding obligation kicks in. Planning this in advance avoids compliance gaps and unpleasant surprises once the assignment is underway.
Contact Person
When does a relocating employee become an Irish tax resident
Ireland’s tax year runs from 1 January to 31 December. An employee will usually be regarded as an Irish tax resident once they spend 183 days in Ireland in one year, or 280 days over two consecutive years.
It is possible for someone to be a tax resident in two countries at the same time during a relocation. Where the move happens partway through the year, the relevant double tax agreement needs to be reviewed to establish treaty residency and the resulting tax outcome for the employee and, in some cases, for how and when the employer should be operating payroll.
We advise companies on all matters relating to employee secondment, ranging from registration with the Irish payroll system and the review of social security status, to the preparation of Irish tax returns for seconded employees.
Declan Dolan, Partner, Fellow Chartered Accountant (FCA), Qualified Financial Advisor (QFA), Dublin, Ireland
What does this mean for the employer
Once an employee is working in Ireland, a number of employer-side questions typically need answering:
- Payroll registration: Does the company need to register as an employer in Ireland and operate Irish payroll (PAYE) from day one, or does a short-term or treaty relief apply?
- Social security: Is the employee covered under Irish PRSI, or can home-country social security coverage be maintained under an A1/Certificate of Coverage or relevant bilateral agreement?
- Withholding and reporting: Where duties are split between Ireland and another country, how should pay be apportioned, and what reporting obligations follow?
- Cost and structuring: Should the assignment be structured as a secondment, local hire, or split contract, and what are the cost implications of each?
These questions apply whether it’s a single executive relocating or a broader group move as part of a market entry.
What happens to the employee's foreign income and assets
Alongside the employer obligations above, it is worth being aware of how the move affects the employee personally, since this can shape assignment structuring and any equalisation policy the company operates.
Foreign rental income, investments, pensions and other assets can still carry Irish tax implications once someone becomes an Irish tax resident. How they’re taxed comes down to:
- Their tax residence
- Their tax domicile (permanent home)
- In some cases, whether income is brought into Ireland
Where an employee is an Irish tax resident but non-domiciled, the remittance basis generally means they only pay Irish tax on foreign income and gains if that money is brought into Ireland. Funds left overseas typically fall outside the Irish tax net. This is one of the reasons Ireland remains an attractive location for internationally mobile staff, despite relatively high headline personal tax rates.
Employment income earned while an employee is physically working in Ireland is fully taxable here, even if paid into a foreign account – which is exactly where the payroll and withholding questions above come in.
