Institute tells NI Assembly Ministers that tax rules on cross-border and remote working are affecting the all island labour market

Last week the Institute wrote to Minister John O’Dowd and Dr. Caoimhe Archibald in Northern Ireland to highlight three key issues which arise for employers and employees dealing with cross-border and remote working issues on the island of Ireland. The letters follow on from similar letters sent last month to Ministers Simon Harris and Peter Burke in the Irish Government. All four letters set out how these issues are affecting employees and employers navigating the rules on cross-border and remote/hybrid working and how these are negatively impacting the all-island labour market and ultimately the economy on each part of the island.

The ongoing work of the Institute’s Joint Working-Sub Group on Cross-Border and Remote/Hybrid working is highlighted in the letters. This work is continuing in 2026.

Each letter highlights how embracing a more integrated approach to cross border working would offer the opportunity to drive growth, build a more stable future for the entire island, and improve outcomes for communities and citizens in both jurisdictions.

Although there are numerous areas to address within the context of a conjoined economic approach, the all-island labour market and the trend of remote/hybrid working models could play a central role in driving productivity, mobility, and growth. Currently there are significant tax policy/administration and associated barriers which are preventing the market from realising its full potential.

The three key issues identified by the Working Sub-Group since it was established in September 2024 are:

• The added administrative responsibilities for both employers and employees when a frontier worker works from home a few days a week. Each letter sets out a high-level summary of the administrative impacts in its appendices. In particular, these highlight how hybrid working requires dual payroll to be operated by the employer in accordance with the individual tax rules in each jurisdiction,
• The disparity in treatment of pension contributions and retirement income. For instance, employee pension contributions paid in one jurisdiction often qualify for tax relief in that jurisdiction but do not attract relief in the country of residence meaning employees in the same organisation are treated differently simply because of their country of residence, and
• The need for education, training and better guidance from government bodies and tax authorities on the implications and complexities which arise from these working arrangements.