We are very proud to announce the promotion of five dedicated team members to key management positions. These promotions are a testament to their hard work, commitment, and leadership within the firm, and demonstrate Crowleys DFK’s ongoing focus on nurturing talent from within.
Meet Our Newly Promoted Team Members
Managing Partner James O’Connor stated:
“We are incredibly proud of Brian, Lawrence, Lara, Domenic and Angeline and their contributions to the firm. Their new roles as Managers and Assistant Managers come at an exciting time for Crowleys DFK, as we embrace the opportunities in the aviation sector from our recent merger with MoyleRoe and prepare to celebrate fifty years in business next year.”
These promotions represent our continued investment in the development and growth of our people. By empowering these leaders, we are ensuring that our commitment to innovation, client focus, and operational excellence are upheld at every level.
Congratulations to all on their well-deserved promotions.
If you are interested in developing your career with Crowleys DFK, please visit our Careers page.
https://www.crowleysdfk.ie/wp-content/uploads/DSC09602-scaled.jpg17102560Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/crowleysdf-chartered-accountants-1.pngAlison Bourke2024-11-04 09:33:512024-11-11 15:16:26Crowleys DFK Celebrates Success with Five New Promotions
The Public Sector Climate Action Mandate (PSCAM) for 2024 was approved and updated by Government in December 2023 in preparation for Climate Action Plan 2024 (CAP24). The aim of the PSCAM is to support public sector bodies covered by CAP24 that have targets to reduce greenhouse gas emissions and improve energy efficiency by 2030. The Mandate sets out goals and targets that must be actioned by public sector bodies. The 2024 Mandate is an expansion of the 2023 Mandate in which existing actions have been added and expanded. This article will talk through the updated Mandate, explain its purpose and describe the new requirements that it presents.
What is the Mandate?
The aim of the PSCAM is to support public sector bodies in Ireland covered by CAP24 that have targets to reduce greenhouse gas emissions by 51% by 2030. The Mandate also supports targets to improve energy efficiency in the public sector by 50% by 2030. Each public sector body to which the Mandate applies is to develop a Climate Action Roadmap that will outline how it will deliver on energy efficiency and reduced emissions targets. Guidelines to develop Climate Action Roadmaps are provided by the Sustainable Energy Authority Ireland (SEAI) and the Environmental Protection Agency (EPA). It should be noted that the Mandate does not apply to every public sector body. Local Authorities, Commercial Semi- State Bodies, and schools are exempt from adhering to the Mandate. The Mandate specifies how public bodies covered by the Mandate may use Green Public Procurement (GPP) as a process to meet an organisation’s needs for goods, services, works, and utilities by choosing solutions that have a reduced impact on the environment.
Status of the 2023 Mandate
Many of the requirements found in the 2024 Mandate are unchanged from previous years. For example, the requirement to establish and support Green Teams remains unaltered, and senior management and members of State Boards are still required to complete a climate action leadership training course. As well as this, nothing has been removed from the Mandate, meaning that any work that has been completed to fulfil the previous Mandate remains valid. The updated mandate expands on Green Public Procurement requirements outlined in the previous mandate, with additional requirements that relate to construction, water use, paper use, and waste management in an organisation.
Changes from the 2023 Mandate
A new requirement related to construction that states that best practice guidelines must be adhered to for the preparation of Resource and Waste Management Plans for construction and demolition projects for procured or supported construction projects from 2024.
A new requirement on targeting food waste on premises from 2024 by using a standardised food waste measurement approach as outlined in the EPA Protocol Pathway.
A new requirement stating that all contract arrangements related to food and canteen services must also address food waste prevention and food waste segregation.
A new requirement that states that water refill points should be provided for staff and that the usage of the refill points should be measured and monitored.
A new requirement to gradually eliminate the use of single use items for events.
A new requirement for the collection and recycling of produce, requiring that waste collection services are segregated into a minimum of three streams: residual/general waste, recycling waste and organic/biowaste.
A new requirement related to paper that states that paper consumption should be measured and monitored.
An amendment stating that the planning of deep-retrofit building measures for Public Sector bodies and sectoral groups should be undertaken at sectoral level for homogenous sectors.
An amendment stating that public sector bodies with a large estate should develop a portfolio building stock plan, in line with guidance published by SEAI. The previous mandate stated that the EPBD was to be consulted for guidance.
A new requirement stating that small public sector bodies should include a basic building stock analysis or statement as part of their Climate Action Roadmap, in line with guidance published by SEAI.
A new requirement stating that public sector bodies with a vehicle fleet should develop a plan for the installation of charging infrastructure in relevant locations and should be included in an organisation’s Climate Action Roadmap.
Taken together, meeting the new Mandate will require attentive work. Crowleys DFK’s team of subject matter specialists are available to assist your development to meet these requirements.
Vincent Teo Partner & Head of Public Sector & Government Services
https://www.crowleysdfk.ie/wp-content/uploads/shutterstock_2345187641-scaled.jpg14402560Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/crowleysdf-chartered-accountants-1.pngAlison Bourke2024-10-22 08:40:082024-10-22 08:41:53Public Sector Climate Action Mandate 2024 – What You Need to Know
The Minister for Finance, Jack Chambers, published the Finance Bill 2024 for approval on Thursday, 10 October. The Bill implements the taxation changes announced on Budget Day. Some of the more notable changes include:
Small Benefit Exemption
The increases announced in the Budget will take effect from 1 January 2025.
National Governing Sporting Bodies
The Bill introduces an exemption from tax on investments for a period of up to 10 years, provided funds are ultimately used for qualifying activities.
DIRT refundable.
Donations to National Governing Bodies (NGBs) for the promotion of participation in sports by women and those with disabilities will attract tax relief.
Donors (PAYE and Self Assessed) may elect for the tax relief to apply to the sporting body or to themselves.
Pensions
Contributions by employers to PRSAs to be capped at 100% of employee’s emoluments from that employment in the previous year of assessment.
The Standard Fund Threshold to increase to €2.8m by 2029 and from 2030 will be indexed linked.
Stamp Duty
Bulk Acquisitions – higher rate of Stamp Duty at 15% will apply to the acquisition of 10 or more residential properties in any 12 month period. Increased rate will not apply to apartments.
New rate of 6% on residential properties over €1.5m will not apply to acquisitions involving three or more apartments.
On the day the rate of inflation within the Eurozone dropped to 2% and against a backdrop of calls from economists warning against overheating the economy, Minister Jack Chambers delivered an €8.3bn budget comprising of €1.4bn in tax measures and €6.9bn in public spending.
A budget surplus of €23.7bn was recorded, boosted largely by Corporation Tax receipts and the Apple Tax judgement proceeds. But when these are excluded, there was a general deficit. It was acknowledged that the Apple back-tax must be used wisely on significant long-term investments in public services such as housing, water, electricity, and transport.
Income tax changes were mainly limited to a threshold increase to €44,000, above which the higher 40% rate of tax would apply and small increases to the main income tax credits and USC rates.
For the SME sector, we see positive enhancements made to The Employment Investment Incentive Scheme (EII) and the commitment to introduce the new capital gains tax rate of 16% for angel investors when disposing of a qualifying investment. The changes will help encourage investment in innovative start-up SME’s and unlock more equity investment in smaller, early stage businesses that are typically most in need of funding.
Also in this sphere, the decision to include Class S PRSI payments in the calculation for the Start-Up relief is welcomed. Although it is somewhat diluted by capping the payment at €1,000 per individual.
The decision to increase the aggregate small benefit an employer can give an employee to €1,500 along with increasing the number of annual benefits from two to five should hopefully address some of the issues that have recently arisen with the new Enhanced Reporting Requirements.
To address concerns over bulk purchasing of residential properties the rate of stamp duty is being increased to 15%. However, its doubtful a 5% rate hike will have the desired effect.
Mindful of implications for large companies under the OECD Pillar Two Agreement it is interesting to note the introduction of a participation exemption option for dividends from foreign subsidiaries and the commitment to address the taxation of foreign branches.
Pre-budget, the feeling was that the Budget would see some significant changes in funding rules associated with PRSAs. However, the minister’s speech lacked any comments on this area. Perhaps it’s a case of wait for the Finance Bill.
The changes to personal tax and welfare support measures will grab the media headlines. However, it is the commitment to FDI and support to grow the domestic SME sector that is vital for a stable economy.
Minister for Finance, Jack Chambers delivered the final Budget today, 1 October 2023. Below we outline the highlights of Budget 2025.
Personal Tax
Income Tax Standard Rate Bands increase by €2,000 to €44,000 (single person), with the married single earner band increasing to €53,000, and the married dual income band increasing to €88,000.
Personal, PAYE, Earned Tax Credits to increase by €125 to €2,000.
Home Carer and Single Person Child Carer Tax Credits will increase by €150 to €1,950 and €1,900 respectively.
Incapacitated Child and Blind Person’s Tax Credits will increase by €300 to €3,800 and €1,950 respectively.
Small change to the second rate-band of Universal Social Charge which will increase from €25,760 to €27,382. The 4% rate is reducing to 3% from 1 January 2025.
Alignment to the tax treatment of Automatic Enrolment Retirement Savings Schemes so that they are similar to that of PRSAs. Employer contributions are tax relieved. Funds grow tax free and a tax-free lump sum can be taken on draw down of the fund up to a maximum of €200,000.
Enterprise/SMEs
Ireland is the only country in the EU which taxes dividends from foreign subsidiaries. It is proposed to introduce a participation exemption for Foreign Dividends to simplify the double taxation relief provisions. Companies will have an option to claim the exemption or continue to use the existing tax and credit relief by way of an election on the company’s annual Corporation Tax return. The exemption will apply for distributions received on or after the 1 January 2025.
Capital Gains Tax Relief for Angel Investment to encourage investment in innovative start-ups is to commence shortly. Qualifying investments will be certified by Enterprise Ireland with a minimum investment in new shares of at least €10,000. Relief will apply if shares are held for at least 3 years. A reduced rate of Capital Gains Tax of 16% will apply on a gain of up to twice the initial investment. A lifetime limit of €10m will apply to the relief.
A 12-year clawback period for Retirement Relief on disposals to children on businesses valued at over €10m.
The various reliefs for Investment in Corporate Trades are being extended for a further two years to 31 December 2025. The €500,000 investor limit on EII investment is being increased to €1m, while it is being increased to €980,000 for SURE investments.
The first-year payment threshold for the Research & Development Tax Credit is being increased to €75,000. The first-year payment threshold, which allows for a claim to be repaid in full rather than spread over 3 years.
The Section 486C Start Up Relief is currently calculated by reference to the amount of employer PRSI paid – up to €5,000 per employee. It is proposed that amounts paid under Class S will also be considered, subject to a maximum of €1,000 per individual.
New relief for up to €1m of expenses incurred on companies on their first listing on a recognised stock exchange in Ireland or the EU/EEA area. The relief is to support companies in the scale up phase of their growth and development.
The cumulative tax-free limit for small benefit exemption is being increased to €1,500 and the number of times an employer can provide a benefit is being increased from two to five per annum.
An exemption from taxable benefit in kind on the provision of EV home chargers.
The CO2 thresholds for claiming capital allowances on business cars is being revised downwards from 2027. An expenditure of €24,000 will be allowable for cars with CO2 emissions of 0-120g/km, a reduced €12,000 for vehicles with emissions of 121-140g/km and no zero for vehicles with CO2 emissions greater than 141g/km.
Agri-Food Sector
CAT Agricultural Relief will now require that the donor must meet a 6-year Active Farmer test.
The measures for Stock Relief which were due to expire at the end of 2024 are being extended to the end of 2027.
50% Accelerated capital allowances for farm safety equipment.
Farmer’s Flat Rate VAT compensation being increased to 5.1%.
Housing/Cost of Living Measures
The Rent Tax Credit is being increased by €250.
The deduction for pre-letting expenditure from rental income will be extended for a further three years, to the end of 2027. The deduction is capped at €10,000 per property.
The Help to Buy (HTB) scheme is being extended to the end of 2029.
The Stamp Duty rate applied where 10 or more residential properties are acquired in any 12-month period is being increased from 2 October 2024 from 10% to 15%. In addition, a 6% rate will apply to residential properties valued excess of €1.5m.
A temporary one-year Mortgage Interest Tax Relief introduced last year is being extended for a further year. Relief will be available for the increased mortgage interest paid in 2024 over 2022. The relief is capped at €1,250 per property and applies to mortgages outstanding of between €80,000 and €500,000 on the 31 December 2022 and fully LPT compliant. Relief is at the standard rate.
The rate of the Vacant Homes Tax is again increased with effect from 1 November 2024 to 7 times the property’s existing LPT liability.
The 9% VAT rate for Gas and Electricity supplies is extended to 30 April 2025.
VAT
The registration thresholds are being slightly increased to €42,500 for the supply of services and €85,000 for the supply of goods from 1 January 2025.
The supply and installation of heat pumps is reduced from 23% to 9%.
The Farming VAT Flat Rate is being reduced to 5.1% from 1 January 2025.
Other Measures
The universal relief of €10,000 to the OMV for vehicles in Category A-D is extended for a further year to end 2025.
The Capital Acquisitions Tax thresholds are being increased as follows.
Category A threshold €400,000
Category B threshold €40,000
Category C threshold €20,000
Two new audio-visual incentives are being introduced. Both require European Commission approval.
A Corporation Tax credit for expenditure on unscripted productions. The credit will be granted at 20% of the expenditure up to a limit of €15m per project.
Scéal Uplift for film production up to a maximum expenditure of €20m. This incentive will form part of section 481 Film Relief.
The Special Assignee Relief Programme (“SARP”) was introduced in Ireland in 2012 to encourage the relocation of key talent within organisations to Ireland.
The SARP programme provides for income tax relief on a proportion of income earned by employees coming to work in Ireland. Where certain conditions are satisfied, an individual can make a claim to have 30% of employment income over €100,000 up to €1,000,000 disregarded for income tax purposes. The relief is available for five consecutive tax years.
In determining whether an individual is entitled to the relief, the amount of compensation, excluding the following items must exceed €100,000:
Bonus payments,
Benefit-in-Kind including company cars and preferential loans,
Share based remuneration,
Termination/ex-gratia payments.
The relief only applies to income tax (PAYE) and does not apply for USC or PRSI.
How is relief granted?
SARP relief can be claimed on a real-time basis via the PAYE system, rather than waiting for the tax year-end to make a claim. While claiming SARP relief, an individual is considered a chargeable person for Irish income tax purposes and is therefore required to file a Form 11 tax return for each year of entitlement.
Example:
Francesco arrived to Ireland on 1 January 2024 and meets all the conditions to claim SARP relief. Francesco is single and his base salary is €150,000.
€
Schedule E income
150,000
SARP Relief
(15,000)
Taxable income
135,000
Total Income tax liability
41,850
Total USC liability
8,503
Total PRSI liability
6,000
Francesco’s marginal income tax rate in Ireland is 40%, so the income tax saving is €6,000 (€15,000*40%).
Other Benefits of SARP
Employees who qualify for SARP relief are also eligible to receive one tax-free home leave trip per annum, including their family. School fees paid by the employer, capped at €5,000 per annum for each child, can also be paid tax-free.
Application Process
Qualifying individuals must complete a SARP 1A application for this relief within 90 days of arrival in Ireland. The employee must have a PPSN to complete the application. They must also have registered their employment with Revenue through their MyAccount before approval for SARP will be issued. From 1 January 2024, the SARP 1A application can be certified through an online e-portal which is available through ROS.
It is important to note that making a claim under SARP will negate other possible claims which may reduce tax e.g. a Foreign Earnings Deduction, Trans-border Relief, R&D (Research & Development) incentive. Employees should therefore take care before making a claim to ensure the relief provides the best tax outcome for them.
Reporting Obligations for Employers
An employer must submit an annual return to Revenue by 23 February, to provide the following information for all qualifying employees:
PPS Number
Nationality
Prior country of residence
Job title/role
Remuneration information (including any reimbursed school fees/home leave trips)
In addition, the annual return must set out the increase in number of employees employed or retained as a result of the qualifying employees working in Ireland.
From 01 January 2024, employers can submit the 2023 Employer Return and all subsequent years through the online eSARP portal.
If you have any questions in relation to SARP relief, or require assistance with preparing a Form SARP 1A application or annual SARP Employer returns, please contact us for assistance.
Pictured (l-r): James O’Connor (Managing Partner, Crowleys DFK), Conor Ward (Managing Director, MoyleRoe) and Edward Murphy (Partner & Head of Tax, Crowleys DFK)
Crowleys DFK, a leading accounting and business advisory firm, is pleased to announce its merger with Dublin-based MoyleRoe, a well-respected accounting firm known for its expertise in the aircraft leasing sector.
The combined firm will operate under the Crowleys DFK brand. Conor Ward, the current Managing Director of MoyleRoe will join Crowleys DFK as a Partner bringing valuable insights and leadership to the firm. Together with his team from MoyleRoe, Conor will lead a specialised Aviation Advisory Services’ Department, offering a full range of services to clients in the aircraft leasing sector.
This strategic merger represents a significant milestone in the ongoing growth and development of Crowleys DFK.
James O’Connor, Managing Partner of Crowleys DFK, commented:
“We are delighted to welcome Conor and his team to Crowleys DFK.
By joining forces with MoyleRoe, we are enhancing our ability to offer new sector expertise and extend our services to a wider client base. This merger seamlessly aligns with our existing specialisations and strategic vision. MoyleRoe’s forward-thinking and personalised approach, strongly resonate with Crowleys DFK’s values. We are very excited about the opportunities and growth prospects that this next phase brings for our firm.”
Conor Ward, Managing Director of MoyleRoe, added,
“By merging with Crowleys DFK, we gain access to their extensive team of skilled professionals, cutting-edge technologies, and global network through DFK International. This means we can offer our clients enhanced services and innovative solutions tailored to meet their evolving needs. We are truly excited about the vast opportunities this merger presents for us and our clients alike.”
In July of this year, the Government passed the Charities Amendment Act 2024. This Act, which introduces a range of amendments and updates to the Charities Act 2009, the Charities Act 1961, and the Taxes Consolidation Act 1997 respectively, amounts to a wide-reaching reform of charity governance. The Act has also expanded the powers of the Charities Regulator with a view to ensuring that financial regulation of the charities sector, as well as regulation of the sector broadly, can be conducted on an appropriate basis.
The Amendment Act is an extensive document and contains 38 separate amendment areas. Tracking these amendments across the Acts will be a complex process. In this article we go through a few key areas covered in the Act, including:
Duties and definitions of trustees
Financial regulations
Role of “Human Rights” in charity sector
Charities Regulator
What are some key changes?
Trustee Definitions:
Under the Amendment Act, new definitions of who counts as a charity trustee and what their duties are, have been established. Section 3A of the Act makes explicit that a company secretary is not considered to be a charity trustee, unless they are also a Board member or sit on the governing body. This clarifies an ambiguity in the previous Act. The Act also sets out the duties falling to charity trustees. The duties include requirements to act in good faith for the charity’s best interests and to avoid conflict between personal and charity interests.
Financial Reporting:
There have been a range of changes to how charities must conduct financial reporting. Reporting thresholds and exemptions have been moved or redefined, new regulations have been introduced, and new alternative reporting methods are now available.
For instance, a charitable organisation, that is not a company and which also falls below a gross income or expenditure threshold of €250,000, is no longer obliged to prepare a statement of accounts. Such an organisation may instead prepare an income and expenditure account in respect of, and a statement of the assets and liabilities of, the charitable organisation.
On the other hand, a charitable organisation that is a company must now prepare financial statements in accordance with the Companies Act 2014.
Many of the financial reporting requirements included in the Amendment Act are similar to the requirements of the Charities SORP (Statement of Recommended Practice). However, the Charities SORP is not explicitly referenced in the Amendment Act and so Charities are not currently required to meet it. Charities should continue to be aware of the Charities SORP, as the Amendment Act does leave room for further regulatory changes that could include introducing the Charities SORP.
Definition of Charity:
The new Act provides an expanded definition of the activities which can be considered to be done for a charitable purpose. The phrase “any other purpose that is of benefit to the community” which was previously used in this definition has been replaced by a list of fourteen (14) activities. These include, for example, protection of the natural environment and the advancement of human rights. Organisations engaged in these activities will now count as charities.
Charities Regulator:
The Charities Regulator has also acquired new powers under the Amendment Act. Any Charity wishing to change its constitution, for example to alter its charitable purpose or its income and property clause, must now apply to the Regulator.
New powers of enforcement and punishment have also been provided to the Regulator, where a Charity fails to meet the new requirements.
What should you do to respond?
The changes brought about by the Amendment Act are extensive and will require adjustment from Charities. Listed below are some actions you may consider taking now to help ease the transition into the new regulatory environment:
Are you a Charity?
Bodies should review the new definitions of what is considered a charity. The Act requires that any organisation that becomes a charitable organisation by virtue of these new definitions must apply to the Regulator to register as a Charity within six months. In turn this will also require that organisations now falling under the Charity Act may have to amend their internal organisation to meet the Act’s requirements.
Who are your trustees?
Changes to the definitions of who is and is not a trustee will require charities to update their register of trustees and other governing documents to account for this.
How do you conduct financial reporting?
Charities should review the amended requirements for financial reporting and determine where they fall on the new thresholds for reporting. For instance, the Amendment Act has raised the threshold requiring that the accounts of a charitable organisation be audited from €500,000 to €1,000,000. On the other hand, while the previous Act exempted a charitable organisation that is a company from this audit requirement, this exemption has now been removed.
Conclusion
Tracking these amendments will be pressing work. It should be noted as well that these requirements are coming into effect immediately. The deadline to register as a charity, under the new definitions, is already approaching.
Crowleys DFK are on hand with their subject matter specialists to provide expert guidance and support in maintaining compliance with the Amendment Act. Please contact us for further information.
https://www.crowleysdfk.ie/wp-content/uploads/shutterstock_2326947217-scaled.jpg17692560Alison Bourkehttps://www.crowleysdfk.ie/wp-content/uploads/crowleysdf-chartered-accountants-1.pngAlison Bourke2024-07-30 09:37:022024-07-30 09:40:01Charities Amendment Act 2024 – What You Need to Know
Finance (No. 2) Act 2023 introduced a new Capital Gains Tax (CGT) relief, “Relief for Investment in Innovative Enterprises” or “Angel Investor Relief”. Angel Investor Relief will allow angel investors to avail of an effective reduced rate of CGT of 16% or 18% for partnerships on the sale of an investment in an innovative start-up SME. The relief can be applied on a gain of up to twice the value of their initial investment and is subject to a lifetime limit of €3 million.
Before seeking investment, the company must submit its business plan to Revenue. If, following consultation with Enterprise Ireland, Revenue are satisfied, they will issue a certificate of going concern and a certificate of commercial innovation to the company. These certificates of qualification are given by the company to the investor to enable them to claim the relief.
There are conditions for both the investor and company to satisfy before the relief will apply:
An individual investor:
Cannot be connected with the company when they make the investment, i.e. they cannot be an employee or director of the company and cannot control the company.
Must retain the shares for a period of at least 3 years.
Must invest cash of at least €20,000 or at least €10,000 where the shares held by the individual represent at least 5% of the ordinary share capital of the company.
Cannot hold more than 49% of the company’s ordinary share capital in total.
Must retain a copy of the certificates of qualification that were valid on the date of investment.
The company must:
Be incorporated and tax resident in Ireland, another EEA State or the United Kingdom.
Carry on or intend to carry on its trading activities from a fixed place of business in Ireland.
Be an “innovative enterprise” i.e.
One that can demonstrate, by means of an evaluation carried out by an external expert that it will in the foreseeable future develop products, services or processes which are new or substantially improved compared to the state of the art in its industry, and which carry a risk of technological or industrial failure, or
the research and development costs of which represent at least 10 % of its total operating costs in at least one of the three years preceding the granting of the aid or, in the case of a start-up enterprise without any financial history, in the audit of its current fiscal period, as certified by an external auditor;
Be a company that it is reasonable to consider intends to, and has sufficient expertise and experience to, implement the business plan.
Be less than five years old and be unlisted.
Angel Investor Relief is currently subject to a Ministerial Commencement Order. Currently, the relief will be applicable to the disposal of eligible shares issued on or before 31 December 2026. It applies on a sale of the entire investment to a third party. It does not apply to buybacks or redemptions effected by the company itself. It cannot be claimed in conjunction with retirement relief and revised entrepreneur relief.
As a new tax relief yet to be signed into operation, it remains to be seen whether Angel Investor Relief will achieve its aims to assist SMEs in attracting investment and to make Ireland a more attractive location for angel investors.
If you have any queries about Angel Investor Relief, please contact us.
Since the COVID-19 pandemic, there has been a significant shift in the way people work, with many employers now operating a hybrid approach to working. Cross-border teleworking can bring a lot of risks and challenges to both employees and employers, not only in the context of tax obligations but also in the determination of the applicable social security legislation. Under EU regulations for cross border workers, where an employee works for at least 25% of their time in their State of Residence, the social security obligation would shift from the Employer State to the State of Residence.
In 2023, 18 EU countries entered into the Framework Agreement on EU cross-border teleworking. The framework agreement follows Article 16 of Regulation (EC) No. 883/2004 on the coordination of social security systems, and provides that teleworking in an employee’s residence state will not be taken into account for determining the applicable social security legislation if it accounts for less than 50% of the employee’s working time.
There are now 22 countries who have signed the agreement, with Ireland signing up to the new Framework on 20 May 2024. This is effective from 1 June 2024.
Conditions:
The new agreement will apply if both member states involved have adopted the framework agreement and the following conditions are met:
The employee has one employer or multiple employers with a registered office in the same member state;
The employee habitually works in the member state of the registered office of the employer and teleworks in the residence state; and
The employee’s teleworking time is less than 50% of his or her total working time.
If the conditions are met, the social security legislation of the member state of the employer’s registered seat would continue to apply.
Application and Procedure:
A request for an A1 certificate must be submitted in the member state where the employer has its statutory seat. Requests can be filed for future periods only. Retrospective applications may only be granted in limited circumstances.
Example:
Mark is working in France for a French employer since 2018. He has always worked 2 days from home in Germany and has been subject to the German scheme since 2018 (substantial activity). On 1 January 2025 his employer asks for an exemption under the Framework Agreement for the coming two years. The Framework Agreement applies and therefore the agreement is considered pre-given allowing France to immediately issue the A1 certificate as competent Member State.
Our View:
In a world where hybrid working is becoming more prevalent, this is a positive update and provides greater flexibility in managing the social security implications for cross-border workers.
It is important to note that the UK have indicated that they will not sign the framework agreement, which is disappointing given the number of cross-border workers between Ireland and the UK.
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