Is it mandatory to claim the PRSI exemption where available?

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ronaldo

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I understand that there is a PRSI exemption allowing cross border workers to escape paying PRSI as they are already paying social insurance contributions in the UK - but is it something that MUST be claimed?

If I earn €25,000 on which National Insurance is paid in Northern Ireland and reside in Ireland, where I also earn €15,000 in trading income, can I leave the PRSI exemption box unticked?

I had a play around when preparing this years tax return online. The result of not ticking the box is that PRSI is calculated on all income, not just the €15,000.

However, can I opt to pay this PRSI despite paying National Insurance in Northern Ireland. This would cost me €1,600 but build a years entitlement to the state pension.

Most guidance I read states that people "don't normally pay PRSI if paying social insurance contributions in another member state" but not that they never do.

Indeed, many are paying voluntary contributions of National Insurance in the UK having left many years ago. This leads me to believe that claiming the PRSI exemption may not be mandatory.

On the flip side of the coin, surely it can't be the case that someone can earn €200,000 investment income a year in Ireland and employ themselves on minimum wage in their NI company, paying National Insurance on minimum wage and escaping PRSI on the €200,000.
 
ronaldo said:
This would cost me €1,600 but build a years entitlement to the state pension.
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I don’t know the answer to your question but building up state pension entitlement at €1,600 a year is still very good value.

It might be useful to clarify your circumstances. Do I understand right:
-you reside in Republic
-are an employee in NI
-have investment income which is not related to your employment in NI
 
That's all correct. Some of the investment "income" is subject to CGT but most is subject to income tax. The portion subject to income tax exceeds €5,000 - if that makes a difference to PRSI class.
 
You are unlikely to ever be chased for paying too much tax.

When it comes to claiming your Irish contributory state pension down the line no one is going to challenge 52 Class S credits in a given year in the past.
 
Dr Strangelove said:
You are unlikely to ever be chased for paying too much tax.

When it comes to claiming your Irish contributory state pension down the line no one is going to challenge 52 Class S credits in a given year in the past.
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Is this an insight based on knowledge and experience, or merely a whim?
 
Dr Strangelove said:
You are unlikely to ever be chased for paying too much tax.
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Almost certainly irrelevant; but I do work with people that weren't aware of the PRSI exemption being available simply because they were paying National Insurance. They paid it for a couple of years and had a lot of hassle trying to claim a refund.
 
ronaldo said:
Almost certainly irrelevant; but I do work with people that weren't aware of the PRSI exemption being available simply because they were paying National Insurance. They paid it for a couple of years and had a lot of hassle trying to claim a refund.
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You won't get a refund of overpaid or wrongly paid PRSI unless you claim it within 4 years. It's basically the same rule as governs tax refunds.

And you won't get any entitlements off them either.
 
Thanks Marsupial.

It's quotes like this that I've read in lots of different sources:
As a general rule persons subject to EU Regulation 883/04 shall be subject to the legislation of a single Member State only.
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So paying in two member states isn't prohibited; it's just not normally done. I was trying to figure out when one was permitted to pay into the system of more than one member state.

You may be right that the answer to my question does lay in this document:
The above appears immediately after the reference to the 'general rule' of only paying into one member states system and the definition for substantial part of the activity refers to 25% of income.

This may be the rule that closes the potential loophole to which I referred in my last statement of the original post when querying whats to stop someone with massive income in the Republic of Ireland getting a minimum wage role in Northern Ireland and avoiding PRSI altogether having paid minimal National Insurance.

I will continue to research but it does look to me like I can refuse the PRSI exemption; but only in years where investment income subject to income tax represents 25% or more of overall income.

The main bit I'm concerned with is the above referring to 'employed' in both states as opposed to merely having income that would ordinarily be subject to PRSI. However, as I say, I highly doubt there is a loophole that would allow multi-millionaires to avoid PRSI on investment income simply by working in Northern Ireland a few hours a week.
 
My experience of dealing with DSP on PRSI contributed (myself and for three relatives) is that they simply check the Revenue record and assess as to whether it has been correctly applied to a PRSI record.

In the case of records from decades in the past I cannot envisage circumstances where the record would be challenged by DSP.
 
The contents of the seminars and technical briefings given by professional PRSI consultants to accountants suggests that it's not nearly as straightforward as that.
 
Dr Strangelove said:
Don’t be so coy!

If you have useful advice for the OP do share.
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I don't actually.

"Do your own research because it's complicated and the system is designed to trip you up" is as good as I can muster.
Dr Strangelove said:
The vagueness isn’t particularly helpful on this or any topic.
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Apologies for doing my best here.

At least the little I've said won't have run any risk of misleading anyone, unlike your contribution.
 
T McGibney said:
"Do your own research because it's complicated and the system is designed to trip you up" is as good as I can muster.
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And the beauty of it all is that if you ring revenue three times to seek clarification; you're likely to get three different answers

The legislation can get complex when you're a non-standard case. For example, it'd be quite difficult to ascertain whether the rules related to paying social insurance contributions in two jurisdictions differ when looking at someone paying national insurance by working in the UK mainland versus someone paying national insurance by working in Northern Ireland and claiming transborder relief on the income.

These outlier cases require a deep-dive into the available documentation and I can see why it'd be unfair to expect a simple call to revenue to clear everything up.
 
@ronaldo

I looked at the UK-Ireland Bilateral Convention on Social Security. It is mainly concerned with people who live in Ireland and work in the UK (or vice versa), or are employed in both, or self-employed in both, or employed in one but self-employed another.


To my eye there is no ambiguity of the above here because (a) your UK income is all employment; (b) your non-labour income is all from investments; (c) you are Irish resident. So you should only have you UK employment income having national insurance deducted by your employer and remitted to HMRC.

Article 25 is also very clear that if you are entitled to both UK and Irish contributory pensions you get both:


The Revenue Manual on this seems to have been updated in April 2024 but it seems silent on the Brexit implications - the vast amount of people availing of Transborder Relief will be working in the UK now, not the EU.

Anyway back to the practicality: as you know all your investment income must be reported to Revenue and you can combine this with UK income to claim transborder relief. I am not familiar enough with the Form 11 but it seems a bit odd that PRSI is either chargeable on your combined UK+Irish income or not at all. Logically there should be no PRSI charged on your UK employment income but neither should you get an exemption for your investment income as it is over €5,000 and therefore subject to Class S PRSI!

I would query this in writing with Revenue - your case cannot be that unusual.

Update us on the thread when you get an answer.
 
Age Action should be challenging DSP on the complexity of PRSI contributions.
The average person should not be struggling to comprehend it.

It's like one of the multiple-choice exam questions .. Q. which of the following statements is most correct?
 
fistophobia said:
Age Action should be challenging DSP on the complexity of PRSI contributions.
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I’m not old and I struggle to follow it!

Part of the problem is that various overlapping bits of information are found in Revenue manuals, Citizens Information, and gov.ie. They rarely contradict each other but the degree of explanation doesn’t always line up.

A taxpayer should have a single, authoritative source of information from their government on what their obligations are.
 
fistophobia said:
Age Action should be challenging DSP on the complexity of PRSI contributions.
The average person should not be struggling to comprehend it.

It's like one of the multiple-choice exam questions .. Q. which of the following statements is most correct?
Click to expand...

Problem is that by the time that people have reached an age where Age Action represents them, it's too late for them to do anything about PRSI!

It's probably the Trade Unions and the various Representative Bodies for the self-employed who should be taking up the cudgels.
 
In reading Article 8, I believe that, should PRSI be compulsory, paying National Insurance and PRSI in the same year does not build entitlement to both state pensions.

One major, major problem I see; unless I'm completely misunderstanding, suggests that the 'UK State Pension bonanza' may not be a bonanza after all.

I've always wondered two things:
  1. Why would the UK give such a massive benefit to those now left the country? If it was an error in judgement, why then have continuously extended the deadline; despite the surge in voluntary contributions coming into their coffers (and the future entitlement to benefits those would imply)
  2. Why is it significantly cheaper for those who are working abroad versus those who are not? Is it because working abroad implies you're likely contributing to the state pension system abroad?

Articles 28 and 31 suggest to me that the UK can look at the benefits earned in Ireland during any year in which a person pays both PRSI and voluntary National Insurance and reduce the UK state pension by the amount Ireland are paying.

If I were correct, given the state pension amounts and the fact that Ireland take 40 years contributions for a full pension whilst the UK take 35 years; the annual contribution entitles one to €6.93 in Ireland and €7.45 in the UK.

I really hope I'm wrong but does article 31 suggest to anyone that the UK could, in theory, allow for a state pension of €0.52 per years voluntary contribution versus the expected €7.45 if that person was employed the full year and earned €6.93 towards their Irish pension?

Article 29.(2) suggests to me that the UK cannot eliminate their need to pay this €0.52 if your Irish pension is increased due to, for example, having a child dependent.

I've not heard of this being applied but the UK will not have seen voluntary contributions on the scale of recent years which brings me back to the two things that trouble me about it all above.
 
ronaldo said:
In reading Article 8, I believe that, should PRSI be compulsory, paying National Insurance and PRSI in the same year does not build entitlement to both state pensions.
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I think you are right in fact. There is a carve-out in Article 12 to allow people to continue to make voluntary contributions even if subject to compulsory insurance in the other jurisdiction. But in your case the contributions would not be compulsory. Article 3 says the UK State Retirement Pension and Irish State Pension (contributory) are both an "old age benefit" so you should not be able to build up entitlement to both as they are the same thing.

However if you pay PRSI on your Irish trading income at Class S I suspect you won't ever be challenged on this. If you are, the worst that will happen is that you get your money back. IANAL.

ronaldo said:
Articles 28 and 31 suggest to me that the UK can look at the benefits earned in Ireland during any year in which a person pays both PRSI and voluntary National Insurance and reduce the UK state pension by the amount Ireland are paying.
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I think you've misinterpreted tis. This section refers to people aggregating UK and Irish contributions to build up an entitlement to a bigger pension in one jurisdiction only. The UK pension bonanza is about people who intend to claim both pensions. Article 12(4) of the Convention makes very clear that if you are employed in Ireland but entitled to pay voluntary NICs due to prior UK employment then you can do so:


As for the UK policy:
I've always wondered the same and have never seen a good reason as to why it's so generous. They have extended the deadline to my knowledge due to a surge in applications. They can't process what they have so are pushing out the deadline. Likewise I don't understand why it's so cheap for those working abroad as you're right they will have cover elsewhere. The only good reason I can think of for the generosity of the whole scheme is the million or so Brits who live some or all of the year elsewhere in Europe (often early retirees) and who I imagine the UK government doesn't want to be seen to have abandoned. But you're right it is crazily generous.

Finally, DSP and/or Revenue should really give better guidance than this. There are I would imagine hundreds if not thousands of people in your circumstances who really should know where they stand.
 
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