Contractors' Questions: How to pay a contractor for a one-off job in Ireland?

Contractor’s Question: I’m seeking an efficient way to pay a UK-based contractor (who doesn't usually contract but is in between jobs), for a short one-off engagement in Ireland at a public sector outfit.

Are you aware of a UK umbrella company which would have an Irish ‘tax clearance’ certificate, as this seems to be a requirement? I believe this would also allow the individual to keep his tax affairs in the UK. Please advise.

Expert’s Answer: In theory, it should be possible to rely on the Double Tax Agreement (DTA) between the UK and the Republic of Ireland. However, where labour-leasing is in point, the Irish authorities tend to expect that Irish income taxes are payable from the first day of a contract rather than only after a stay in Ireland of 183 days as allowed under the DTA.

It is not a UK umbrella company that requires a tax clearance certificate but the contractor. However, the certificate will only be issued if the stay is for less than 183 days. Stays beyond this length will certainly make the contractor tax liable, and from the first day of the assignment.

If this turns out not to be a case of labour-leasing i.e. the contract is one for independent services rather than dependent services, and thus relying on the DTA is possible, then the umbrella company should withhold UK income tax (PAYE) from the contractor and obtain an A1 from HMRC to avoid paying PRSI and USC in Ireland. 

The Irish Revenue service should issue a tax clearance certificate on submission of form TC1 to the authorities if they consider that no Irish taxes are due. Good luck!

The expert was Kevin Austin, director at Access Financial, a tax and accounting specialist serving UK contractors working overseas.

Editor’s Note: Related –

Contractors’ Questions: Can non-UK residents work in England if already in Ireland?

Contractors’ Questions: How to pay my ‘Ltd’ Euros from Ireland?

Contractors’ Questions: Does UK VAT cover Irish agents?