Irish Citizen working for UK company in another EU Country

Irish Citizen - Tax/NI

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Hello, 

I am finding this rather complicated to figure out on HMRC website, any advice would be appreciated. 

We are a UK company who carries out site work in other EU countries.  We will be employing an Irish citizen to provide labour on site in Cyprus.  At no point will they reside or carry out any work in the UK.  They will not have an NI number.  

How do I treat this employee for tax/NIC?  I think it would be easier for us to make them sub-contractors and ask them to invoice us for their time, giving them the responsibility to declare their earnings to the Irish tax authority, but they may resist this.  

Any help welcome. 

Thank you.

EM

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By David Heaton
20th Jun 2016 12:19

Tax: He needs to apply for an NT code, as he has no UK tax liabilities if he has no UK duties as a non-resident. Tell him to call the helpline. There was a time where a UK employer taking on a non-resident for wholly non-UK duties could use NT without asking, but you now have to ask. If you have a construction site in Cyprus and his wages will be deducted in arriving at the profit there, you may need to operate Cypriot tax - check with a local adviser. Even if you don't have to deduct, he may have to pay Cypriot tax personally.

NIC: He's a posted worker in EU social security terms. He and you are liable to Cypriot NI (because that's where he works) unless he can obtain an A1 certificate to keep him insured in Ireland or the UK, both of which are unlikely. It is long-established (the Manpower case) that a worker can be recruited in one member state by an employer in that state for immediate posting to another state, but you are dealing with three states. Given that Cyprus needs the contributions, I suspect the Cypriot authorities will want to apply the letter of the EC regulations and collect both employer and employee contributions there. The UK is unlikely to want him acquiring a UK contribution record when he has no connection here other than his current employer.

If he can validly work on a self-employed basis in Cyprus (bearing in mind that their rules may differ from ours), that might be less complicated. He should check, though, whether he needs to register for VAT in Cyprus if he goes down that route. The registration threshold is low, about 20% of ours.

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By Ellemme
22nd Jun 2016 13:36

Hello David, thank you very much for your detailed reply, much appreciated.

EM

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