In general terms, if your business is based in Northern Ireland and employs an Irish resident to carry out duties in Ireland, a PAYE scheme must be operated in Ireland and you, as the employer, are required to register and account for PAYE/PRSI contributions in Ireland.
Bear in mind that if you employ someone in Ireland to work for you, that employee can avail of rights under Irish Employment legislation. Specific legal advice should be taken with regard to the employment contract. While Ireland and Northern Ireland employment legislation are broadly similar, there are specific areas where the legislation differs between the two jurisdictions e.g. redundancy payments.
This is a complex area, which has been further complicated by a tightening of the rules by the Irish Revenue Commissioners. If a Northern Ireland employer, who does not have a permanent or deemed permanent establishment in Ireland, is sending UK resident employees into Ireland to work and they spend more than 183 days per year working in Ireland, those employees must be on an Irish payroll.
Where a Northern Ireland employer has UK resident employees working in Ireland for more than 60 days the Northern Ireland employer must register for Irish payroll. There is no requirement to operate Irish payroll where certain conditions are met (e.g. employee taxed in UK, employees carry out their duties in Ireland for less than 183 days, etc.). The employer should also seek clearance from Revenue Commissioners within 21 days from employee taking duties in RoI.
Please note that where the UK business has a permanent establishment (or deemed establishment) Irish PAYE must be operated even if the employee only works for one day in Ireland. The 183 day rule does not apply in this instance.
The UK employer must continue to operate UK PAYE in respect of any payments made to the employee during the period they work in Ireland if this period is less than a year. The employer may then give a credit against the UK PAYE due for the lower of the two taxes i.e. Irish PAYE v UK PAYE. Irish PRSI will not apply in this instance if an A1 certificate is granted to continue paying NIC in the UK. However, if the employee is spending most of their time abroad over a period of a year or more, then HM Revenue & Customs may allow them to use special PAYE arrangements whereby they would get relief from UK tax.
This could result in employees receiving less takehome pay than they would if their salary was only subject to the Northern Ireland/UK PAYE system. This is likely to cause great complications and labour relations problems for Northern Ireland employers whose employees are regularly assigned to work in Ireland. For this reason, you are strongly advised to consult your professional adviser if these rules are likely to impact upon your business.
As Ireland have introduced a new statutory residence test, employees who exceed 183 days in Ireland may need to take separate advice in respect of their overall tax position.