# Does Irish PAYE apply



## skieve (23 Sep 2013)

A friend has a haulage business - an Irish registered company.

A lot of the work in performed in other jurisdictions - UK etc.

The company employees European drivers to work the routes outside of Ireland. These men have never worked or lived in Ireland, are not registered for tax in Ireland and all of their work is performed outside of Ireland. 
They are paid by the Irish company. The company is not registered as an employer in other countries.

Should Irish PAYE apply for these men ?


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## Joe_90 (23 Sep 2013)

[broken link removed]


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## skieve (24 Sep 2013)

Great Joe, thanks.

Revenue being a bit sticky on this point.


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## dublin66 (26 Sep 2013)

I would have thought that a PAYE exclusion order is the route.  No employment exercised in this country excludes them from PAYE. USC follows PAYE.  Social insurance may be a little different.

The question I would ask is whether the employer has a requirement to register and deduct payroll taxes in the other country. If it were Ireland the foreign the employer would be required to register.


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## skieve (26 Sep 2013)

Thanks dublin66.

For the moment, he is just concentrating on Irish Revenue and PAYE.

Joe 90's eBrief refers to a PAYE exclusion order but this may not would apply as the workers do not have a PPS number as they have never worked or lived in Ireland.

The exclusion order may be the way to go.


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## Jim2007 (26 Sep 2013)

You need to turn the question around and ask how can a person who is not resident in the state and carrying out all of their duties outside the state be subject to Irish income tax etc....

I think you'll find that it is not possible!


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## Joe_90 (27 Sep 2013)

Indeed, the employee does not need a PPS number to get an exclusion order.


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## skieve (27 Sep 2013)

Thanks Jim and Joe,

I take your point. 
This issue arose for my friend during a Revenue audit. Revenue insisted that PAYE should have been applied and was looking for cash.
My friend, and it is my friend, then tried to apply for PPS numbers for the men but registration section of Revenue told him this was not possible as the men do not live or work in Ireland.
Crazy situation.


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## Joe_90 (27 Sep 2013)

Well your friend needs to operate PAYE unless he holds a PAYE exclusion order I don't think that there is any doubt about that.

PPS nos may be an issue going forward but would not going back as emergency tax applies in their absence.


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## skieve (27 Sep 2013)

Hello Joe, so are you saying that they are liable to Irish income tax afterall ?

If you are, I am wondering on what grounds because I can't see how they could be.


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## Joe_90 (27 Sep 2013)

If you are paying employees in Ireland.  You as an employer have an obligation to operate PAYE.  

You can't just decide this employee is not resident therefore I won't operate PAYE.  You apply for a PAYE exclusion order which gives you permission not to operate PAYE.

The employee may be non resident and not subject to Income Tax and will get a refund of PAYE.  There are two separate issues here and it's easy to get them mixed up.


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## newirishman (27 Sep 2013)

How is the payroll handled for the European drivers? Unless the drivers are self-employed contractors, your friend's business needs to manage the payroll somehow.
I am not familiar with the specifics of cross-border employment rules, but I would assume that in order to employ people in a different country you have at a minimum register with the revenue there for income tax / PRSI / etc purposes, either by setting up a company yourself or using some type "payroll / employment service".
EDIT: income tax is of course mainly the problem of the employee. PRSI (or equivalent) though is usually also payable by the employer.

Here's some statement from UK government: http://www.dwp.gov.uk/international...-people/employed-or-self-employed-in-another/


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## Joe_90 (27 Sep 2013)

@newirishman you are correct but that is a further complication of the issue at hand.

The point here is the non resident drivers in this case are not subject to Irish income tax when non of the duties are carried out in Ireland.  The obligation to operate PAYE is on the employer unless they have a PAYE exclusion order.


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## skieve (27 Sep 2013)

Thanks Joe, and my apologies if I am being a pain about this.

To clarify, apply emergency tax going back even without PPS number, apply for an exclusion order going forward.
Can the exclusion order be backdated - i.e. to reclaim the emergency tax ?
And finally, is it possible to get an exclusion order for someone with no PPS number ?


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## Joe_90 (27 Sep 2013)

I don't deal with PAYE audit so can't clarify if Revenue would backdate a PAYE exclusion order.

Emergency Tax applies because the employee has no PPS no. and the employer  has no Certs of tax credit and standard rate cut off.

I have obtained a PAYE exclusion order for an employee with no PPS no. But they wanted us to confirm that he was paying tax in the UK as he was resident there he had a UK number.


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## skieve (27 Sep 2013)

Thanks Joe, appreciate all of your replies.


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## dublin66 (27 Sep 2013)

I can add some light to this. The Revenue requiring an exclusion order is their practice but is not wholly correct. 

There is however a legislative basis for employees who exercise their duties totally outside of Ireland being outside the scope of PAYE. The general requirement to operate PAYE is contained in section 985 of the TCA. The PAYE regulations essentially require that emergency tax be operated unless the employer is in possession of a tax credit certificate etc. However there is an exclusion from this regulation (i.e. the requirement to operate emergency tax) where the employment is wholly exercised outside of Ireland. It is contained in regulation 22(7) of the Income Tax (Employments) (Consolidated) Regulations, 2001 and it states:

(7) This Regulation shall not apply where -

(a) the employee performs the duties of his or her employment wholly outside the State, or


(b) the employee is outside the State and the emoluments are paid outside the State.

This means that emergency tax does not apply where the employment is exercised outside the State.  There is no mention of exclusion orders or anything else.  While Revenue practice is to talk about exclusion orders it is not wholly correct.  I would add that this regulation existed before the USC, or the income levy, and PRSI is a different matter.

However it your friend can get his liability confined to USC and PRSI he is a different position.  I have not examined the issue of USC in light of this regulation and cannot comment further than that.

Your friend probably needs to consult a tax expert in this area who will really fight their corner.  Anyone who has worked in practice would be aware that the Revenue audit inspectors are more guided by their practice notes and not the legislation.


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## Joe_90 (28 Sep 2013)

That I did not know that. 

I also took advice from one of the big 4 on it, in our case the employee was based and was resident outside the state but would have to attend a meeting in Ireland twice per annum, perhaps this did not meet the "totally outside the state".

In this case if the drivers came to Ireland with the trucks at all would this cause an issue.


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## skieve (28 Sep 2013)

That is very interesting Dublin66, thanks.


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## Paddy199 (30 Sep 2013)

Yes, you can get a PAYE exclusion order for persons with no PPS number.

Revenue will date the exclusion order the date of application and will not backdate it. PAYE exclusion only applies from this date forward.

A PAYE exclusion also applies to USC.

PRSI - separate application must be made for PRSI to a Waterford office, but do check this out.


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## Joe_90 (30 Sep 2013)

@paddy199 I thought the same but @Dublin66 is suggesting that when the employee is non resident and none of the duties are carried out in Ireland PAYE does not apply and therefore an Exclusion Order is not required.


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## mandelbrot (30 Sep 2013)

Looking at what Dublin66 referred to, it just means that Emergency Basis of Deduction doesn't apply - since Regulation 22 only deals with that. Not sure where that leaves the employer in terms of any other obligations under the Regulations though...


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## Joe_90 (30 Sep 2013)

So the OPs friend would normally operate emergency tax but as it does not apply they don't have to deduct any income tax? 

Is that right?


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## dublin66 (30 Sep 2013)

Yes Joe 90 that is correct. Reg 22 is the default position and apply emergency tax when you don't have a tax credit cert. However emergency tax does not need to be applied on the basis of reg 22(7) thus no requirement to deduct PAYE.

I would not automatically however extend this to USC and PRSI as different rules and I haven't worked through these.

If I had the option of applying for an exclusion order in advance I would.  As has been mentioned above exclusion orders do exempt USC but only apply from the date of issue (and not application as I found out myself a number of years back).


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## skieve (30 Sep 2013)

Hello Folks, thanks again for all of your considered replies.

Obviously a tricky area.


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## Paddy199 (2 Oct 2013)

@Joe90 I was specifically responding to the PAYE exclusion order query.

@Dublin 66 is absolutely correct in what he is saying. I got an exclusion order last year and it was dated the application date (I did fax it, maybe that made a difference).

If the company is paying the foreign employee from Ireland, Irish payroll taxes apply. Therefore you need a PAYE exclusion order.

It's only outside scope of Irish payroll taxes if paid outside of Ireland. The company may need to register in that company and return local payroll taxes.


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