The rise of the cross-border worker

However, it would be remiss to conclude that “normal service” has resumed. In the world of employee mobility, there has been a seismic shift in “how and where” employees work. 

Whilst this is a global phenomenon the particular circumstances on the Island of Ireland, mean that precedent set by Covid “work from home rules” is not the only factor in the rise of the cross border worker. 

Years of continuous investment in the transport infrastructure between the Republic of Ireland and Northern Ireland makes for easy travelling between the two jurisdictions….you don’t even need to blink to miss the border. The Centre for Cross-Border Studies estimate that annually 30,000 people now cross the border to work each day.

The trend of increased levels of cross border trade has continued and accelerated in recent years, partly due to post Brexit shifts in supply chains meaning that more goods travel through Northern Ireland on their way to or from Great Britain, or further afield. Undoubtedly, this must result in a corresponding increase in the numbers of workers travelling across the border. 

However, the ease with which workers can move between the two different countries means the tax and legal implications are, like the border itself, easy to miss. 

Every day I have queries from employers who have workers carrying out duties across both jurisdictions in a variety of scenarios. This might look like working at home several days a week where home is in a different country to the normal workplace, making regular business journeys or transporting goods over the border.

The tax outcomes are not straightforward, often requiring dual or shadow payrolls and corresponding foreign tax credit claims, social security agreements and the risk of creating unintentional foreign tax presence for the employer. 

From a legal perspective employment contracts are also impacted as they are subject to the jurisdictional laws in the country where the duties are substantially performed; there can also be implications for employee pension arrangements and associated tax reliefs.  Employers leave themselves unintentionally exposed to the laws of another country where they engage cross border workers.

As Covid restrictions become (hopefully!) a distant memory and as employers struggle to recruit and are forced to when their met in a search for talent, the movement of employees across borders is set to continue so it is vital that businesses are mindful of the tax and legal complexities and seek appropriate advice.