Given the land border between Northern Ireland and the Republic of Ireland, as well as the relatively small size of the island, cross border working is a very common practice. In fact, Ireland has the highest level of in-bound (10.55%) and out-bound (7.44%) commuters in the EU, discounting Luxembourg, Liechtenstein and Monaco due to their special status in the EU. It is estimated that around 23,000 people cross the Irish border for work. Whilst this practice is very common, there are a number of things you should be aware ofif you live and work on different sides of the border.
1. Where to pay your taxes
As a rule of thumb you must pay your tax where ever you earn your income. However, your ultimate responsibility is to the country in which you reside. Effectively this means declaring your cross border income to the tax authorities where you live (either HMRC or Revenue) via an annual tax return. The income is then taxed as if it were earned where you live. If the amount of tax you have paid in the country where you work is greater than it would have been in the country where you live, no further tax is payable. However, if the reverse is true, you are liable to pay the difference to the tax man where you reside.
2. USC counts as tax
If you work in the South, you may have noticed a charge on your payslip for Universal Social Charge (USC). This is effectively another tax on income for workers in the South, just with a fancy name. When it comes to declaring your Southern income to HMRC, you can include this in the amount of tax you have paid in the South, thus reducing the likelihood of having a balance of tax to pay.
3. Family Benefits
Depending on where you live and where each parent in a family works, your claim to family benefits may be through the North, the South or a mix of both. The means of determining this is quite complex. However, it is worth looking in to and exploring what your own personal circumstances mean in relation to this. Thankfully though, if you are eligible to claim benefits from more than one jurisdiction, you can claim it in the country which has the higher rate of that particular benefit. For more information on where you should be claiming, check out www.borderpeople.info who have produced a briefing paper with a table outlining numerous examples.
4. State Pensions
EU states that you only have to pay Social Security contributions in one country at a time. Therefore, if you have a job on either side of the border, you are entitled to an exemption from PRSI/NIC in one of them. When it comes to retirement, you should claim your State Pension in the country in which you reside. All of your Social Security contribution across all EU countries can be combined to ensure you qualify to receive it.
5. Paternity Leave
In Northern Ireland and Great Britain, the male or female partners of a woman who has given birth can apply for 2 weeks Paternity Leave and may be entitled to claim Statutory Paternity Pay during this period. At present, Paternity Leave is not recoginised in law in the Republic of Ireland. However, from September 2016 father will be able to apply for up to two weeks paid leave at the same weekly rate paid for maternity leave (€230). It appears that this will only be available to fathers (as opposed to partners regardless of gender).
As outlined, there are a number of key issues to consider when working cross border. The above is just a snapshot of a few of these. For more information, I highly recommend visiting http://borderpeople.info and looking through their FAQ’s and A-Z to find out which issues apply to you and matter the most to your circumstances.