Cross Border Pension Contributions

This is a tricky one. I've spent a long time reading up on crossborder pensions and none of the legislation appears to apply to me!

A brief outline of my situation:

I work for a UK employer and exercise my employment both in the UK and all around the world. As a Non resident of the UK I only pay tax on the days I work in the UK. As I'm domiciled/Ordinarily res/resident in Ireland my final tax liability is in Ireland. I cant claim transborder relief as I'm not fully taxed in the UK.

My question is-If myself and my employer contribute to a the company scheme (approved by HMRC in the UK) will I qualify for tax relief on my contributions in Ireland? Also, Employer tax contributions are a taxable benefit and I'm worried that the Revenue may view it as a Benefit in Kind and try to tax me on it due to to the fact it's not an Irish revenue approved scheme!


Any thoughts?

I'm not an accountant or tax professional, so I can only offer a partial answer. I'd suggest you consult an accountant familiar with cross-border taxes to get the rest of the picture.

If you set up a UK pension scheme, approved by HMRC, you cannot claim Irish tax relief on contributions. If your taxes are paid predominantly here in Ireland, a more common solution would be to set up an Irish pension arrangement instead.

Thanks for your reply.

My employer will only contribute to it's own scheme in the UK. It has employees who live worldwide due to the nature of the business. It cant be expected to have a scheme in each country that one or two people live.

I have been to two tax-professionals who have both been clueless. Neither of them could advise me on this. They were, however very good at telling me information that I already knew!

crossborder said:

My employer will only contribute to it's own scheme in the UK. It has employees who live worldwide due to the nature of the business. It cant be expected to have a scheme in each country that one or two people live.

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We have numerous clients in similar situations and the solution has been that the employer hands the legwork of setting up the pension scheme over to the employee. The employee researches and sets up a suitable pension arrangement and on an ongoing basis the employer only has to make the agreed contributions on time, which is no different to what they would have to do if the employee joined the UK scheme.

If your employer is not willing to accomodate this, then my own opinion is that you would not qualify for relief on contributions to a UK scheme and the employer contributions would be treated as a BIK. There are exemptions made for people on temporary secondment in Ireland and other special situations, but I don't think your circumstances fall into any of these special categories. Most of the special situations involve people who are already members of overseas pension schemes and then move to Ireland. It is sometimes possible for an overseas pension scheme to apply for approval by Revenue, but that would require the scheme administrators to go through that process.

The full text from the Revenue Pensions Manual can be downloaded [broken link removed].

Thanks again for your reply.

Yes I agree with you regarding me not fitting into the revenue box ticking! I've read and re-read the revenue pensions manual.

However, in my opinion they would be going against the spirit of the EU laws on discrimination and the EU pensions directive by not recognising my pension. It's a farce and will only result in me moving to the UK if this is the case. The net result is the Irish exchequer gets nothing from me.

Between National insurance in the UK and Irish tax I'd be paying an effective rate of 66% were they to tax my employer contributions. There must be a simpler solution than setting up another pension.

I agree. I can only suggest that you take it up directly with Revenue, setting out your position, giving details of your employer's UK pension scheme and asking that they grant the same tax reliefs to you and your employer in respect of the UK pension scheme as if the scheme were an Irish scheme, given the unusual particulars of your employment and residence.

Revenue Pensions Business Unit
Large Cases Division
Ballaugh House
73-79 Lower Mount St
Dublin 2

Tel 01-6131800
Email lcdretirebens@revenue.ie

Thanks for the advice. I'll certainly be in touch with your business if I need to set up an Irish pension.

Just as a matter of interest-Why the large case division as opposed to local tax office?


Thanks

For some reason, the Retirement Benefits people in Revenue have always been a division of Large Cases. I don't know why. But I do know that, as this is mostly a technical pensions issue, you're better off going straight to the team that handles pension queries, as the local office might or might not have the required technical knowledge (and might well pass your query on to Mount Street anyway).