Working abroad – your Income Tax implications

Working abroad – your Income Tax implications - Crowe Ireland

Crowe tax partner, Lisa Kinsella, answers a Sunday Times reader question.

The following is an extract from the Personal Money section from the 27 January edition of the Sunday Times.

Question: I’d like to move to France but continue working for my Irish-based employer. How would it affect me in terms of tax, and where should I go for advice?
A Dowling, Dublin

Answer: On the basis that you will no longer be tax resident in Ireland and no duties of employment will be carried on in Ireland (with the exception of incidental duties where you can spend up to 30 days working in Ireland), your employer can apply for a PAYE exclusion order, which will exempt them from having to withhold Irish tax from your salary in Ireland. In the absence of such an order, your employer must continue to operate payroll taxes on your salary even if you are not performing duties in Ireland.

If payroll taxes are withheld and you are tax resident in France, you may be able to claim a tax credit in France for the Irish tax withheld.

Your employer may also have a French tax exposure and this would need to be explored with them as they may be required to withhold payroll taxes in France and make French social security contributions on your behalf. French rates of social security are quite high so this would need to be considered in detail.

Alternatively, if your employer is a large multinational that has a subsidiary in France, it may be more tax-efficient and cost-effective to be hired by that company as opposed to continuing to be an employee of the Irish company. Again, this is something you could discuss with your employer.

Some other points for you to consider include your eligibility for the Irish state pension if you return to Ireland in later years. As you are ultimately making your own decision to move to France, it is unlikely you would be treated as a “posted worker” such that you would not qualify for what is called a certificate of coverage. On this basis, you would not be permitted to remain with the Irish social security regime and instead would have to pay social security in France.

However, there are EU regulations in place which allow the social insurance contributions in France to be added to the contributions in Ireland to help you qualify for the state pension in Ireland.

Separate to your employment income taxes, another factor you should consider is whether or not you will dispose of your Irish family home. Where this is your principal private residence (PPR), you will be exempt from capital gains tax (CGT) on any uplift in value on its disposal. However, if you were to hold on to the property while in France, and let it out, you could be subject to CGT on a future disposal as the house has not been occupied as your PPR.

Any rental income received will be subject to tax in Ireland as the property is located here, and also subject to tax in France if you are tax resident there. However, double taxation relief may be available where you are subject to tax in both jurisdictions. You should seek advice from a chartered tax adviser if you would like to progress a relocation to France.

For additional information on any area of personal tax or Income Tax tax, please contact a member of our tax team.

Working abroad – your Income Tax implications - Crowe Ireland