UK Tech Contractors in Ireland

The Irish tech market is booming, and its imprint can be seen high across the Dublin skyline: a newly reinvigorated Dublin docklands boasts several fresh builds as PWC, Google and Facebook are complemented by new neighbours like JP Morgan and job-search giant Indeed. The digital docks are driving Ireland’s economic charge and there are opportunities abound for foreign IT Contractors seeking to ply their trade in a lucrative new market.

In March US banking giant JP Morgan revealed that Information Technology will act as the main driver to its Irish expansion as it seeks to double its workforce here – IT-based professionals will occupy a significant number of the 1,100 workspaces the company expects to fill in its new €125 million dockland development.

New tech expansion announcements have become commonplace in the last few months, with large-scale recruitment drives by household names like Salesforce and Indeed, together with health-tech firms IQVIA and Eurofins underscoring the vitality of the Irish job market. Conversely, JP Morgan announced that Brexit could lead to 4,000 UK-based jobs being moved elsewhere.

There has never been a better time for UK-based Contractors to consider a move to the Irish market. Ireland is a business-friendly environment and foreign Contractors after often viewed as a welcome resource used to bridge any knowledge gaps in our domestic workforce. 

The duration of a contract is a key factor in determining the tax obligations of a UK Contractor seeking to work in Ireland – for shorter contracts there is very little legwork involved in set-up. When a contract is less than 30 days long there is no onus on a Contractor to operate PAYE in Ireland. The same rule apples to contracts less than 60 days, provided the following conditions are met:

The employment meets the criteria of ‘genuine foreign employment’

The Contractor is resident in a Double Taxation Agreement (DTA) country

The person is not paid by an Irish Permanent Establishment (PE)

The contract is completed in less than 60 days

This PDF prepared by the Revenue Commissioners discusses the PAYE criteria non-Irish employments in detail, including ‘genuine foreign employment’. It’s also worth consulting an accountant in your own country, especially if you’re unfamiliar with any of the technical jargon.

Under Irish law, a UK-based Ltd company operating in Ireland for more than 60 days will need register as an employer in Ireland. It will need to operate PAYE unless an exemption is sought. In order to satisfy the criteria for an exemption the company must meet points 1 – 3 above, have registered as an employer and maintain a record of the full name, latest Irish and overseas address, date of commencement and cessation of the contract. It’s also important to note the location where individual carries out their duties and amount of earnings in relation to assignment.

Revenue requires Contractors to sign a written acknowledgement saying that if they’re found liable for PAYE, they agree to pay. They may also request a copy of the contract.

UK Contractors operating in Ireland on a long-term basis will need to familiarise themselves with Ireland’s iteration of the 183-day rule. The rule is very similar to its UK equivalent – once a company is operating in Ireland for more than half a year, they’re legally required to register as tax resident. Once the company has registered to pay their tax here, the income they generate in Ireland will no longer be subject to UK tax. It’s important to note that the Irish tax year runs through the calendar year, unlike the UK where Contractors are assessed from April 6 through to April 5 the following year.

Investigate and you’ll find that there’s a widely-held perception among Contractors that the UK tax regime is more favourable than the Irish equivalent; however it’s worth noting that UK Contractors operating in Ireland can still take advantage of the UK dividend payment set-up whereby HMRC allows Contractors to draw a £2,000 tax-free dividend allowance. Dividends paid afterward are taxed at a lower rate than salaries (7.5%), enabling Contractors to retain more of what they earn. Contractors will need to remain as a tax resident in the UK in order to access the favourable dividend option. UK Contractors are also entitled to claim for their accommodation and travel expenses, ensuring that the transition from contracting in the UK to Ireland is a smooth one.

An appealing economic environment, booming job market and pro-business tax regime are all reasons to explore contracting in Ireland. The Irish economy grew by 6.7% in 2018—compared to 1.4% growth in the UK –  and is expected to expand by a further 4.1% this year, with Ireland’s tech-heavy professional service industry at the forefront of our economic surge. There has never been a better time to consider contracting in Ireland.

As each contractor will have different tax circumstances, the implications of any move should be discussed with your tax advisor and a tax plan should be in place prior to your move. If you’re an UK-based IT professional considering Contracting in in Ireland, Icon Accounting can provide you with any assistance you need. Contact us today to learn more.