Cross-border tax rules are limiting the potential of Ireland’s all-island labour market, with employers and workers reporting confusion over payroll, pensions, social insurance and remote working. A new report says the barriers are making it harder for businesses to recruit scarce skills and discouraging employees from pursuing better-paid opportunities across the Border.
Key findings from the report
The report, produced by Ibec, the Confederation of British Industry and recruitment firm Hays, highlights a significant gap between demand for cross-border employment and the practical ability to support it.
- Almost 46 per cent of workers would consider taking a job across the Border.
- More than two-thirds of employers believe the skills they need are available in the neighbouring jurisdiction.
- Only about one-third of employers are confident they can manage the related tax requirements.
- Some 53 per cent of employers support greater tax alignment between HM Revenue and Customs and Revenue.
- Half of employers are struggling to recruit people for key positions.
The findings place cross-border tax rules at the centre of a wider debate about labour mobility, recruitment and the future of the all-island economy.
Why cross-border tax rules are creating problems
Employers operating in both jurisdictions may need to navigate separate systems for income tax, payroll reporting, social insurance, pensions and welfare entitlements. The administrative burden becomes more complicated when an employee lives in one jurisdiction, works in the other or divides their time between locations.
Employers surveyed for the report said a lack of clear guidance makes it difficult to establish what obligations apply. In some cases, businesses must consider dual payroll arrangements, while employees may face uncertainty over deductions and their final tax liability.
Remote working has added another layer of complexity. Since the Covid-19 pandemic, more people have expected to work from home for at least part of the week. However, working remotely from one jurisdiction for an employer based in the other can affect tax residence, payroll, social insurance and reporting responsibilities.
Workers are attracted by pay and career opportunities
For employees, the prospect of higher wages, career progression and access to a larger range of jobs is a strong incentive to consider working across the Border. The survey suggests that almost half of workers would be open to such a move.
Yet tax is not the only practical obstacle. Workers identified the daily cost of commuting as a bigger concern than taxation, followed by transport links and housing affordability. These pressures are especially relevant for people who would need to travel regularly between towns and cities in different jurisdictions.
A cross-border role can therefore involve more than comparing gross salaries. Employees may also need to consider fuel or public transport costs, travel time, accommodation, pension arrangements and whether tax deductions will change after taking up the job.
Unequal treatment under existing reliefs
The report points to differences in how cross-border workers are treated depending on where they live and work. Residents in the Republic who work north of the Border can benefit from Transborder Workers’ Relief in certain circumstances, reducing the risk of paying additional tax on foreign earnings.
There is no equivalent relief for Northern Ireland residents working in the Republic because of the way the UK foreign tax credit system operates. The report says this can result in top-up tax bills for some workers in the North, making cross-border employment less financially attractive.
These differences are particularly important when salaries, tax rates and commuting expenses are assessed together. A role that appears better paid before deductions may provide a smaller financial benefit once travel and additional tax are taken into account.
Why the issue matters for Ireland’s economy
More than 550,000 jobs have been created across the island since 2019, according to the report. However, the authors say there are early indications that the labour market may be cooling, with one in four employers expecting tighter conditions over the next year.
At the same time, businesses continue to report serious recruitment challenges. Half of employers are finding it difficult to fill key roles, while more than 69 per cent believe the specialist skills they need already exist across the Border.
Improving labour mobility could help employers access a wider talent pool without requiring workers to relocate permanently. It could also support regional economies, strengthen business links and make it easier for people to pursue employment based on skills rather than jurisdiction.
However, the report warns that complex rules can reduce flexibility and leave businesses unable to fill vacancies. For workers, uncertainty can mean declining an opportunity before they fully understand whether it would improve their finances or career prospects.
What employers and workers want next
The report calls for clearer, more consistent arrangements covering the main issues that arise when people work across the Border. Employers are seeking practical guidance that reduces uncertainty and makes compliance easier.
Its findings suggest that policymakers should focus on:
- Clearer explanations of income tax and payroll responsibilities.
- Better coordination between Revenue and HMRC.
- More transparent treatment of pensions and social insurance.
- Guidance for cross-border remote working.
- Fairer arrangements for workers who face additional tax liabilities.
- Improved transport connections and support for affordable commuting.
Businesses also need to assess each employee’s circumstances individually. Residence, work location, travel patterns and the amount of time spent working remotely can all affect the obligations that apply.
Frequently asked questions
How many workers would consider a cross-border job?
The report says 46 per cent of workers would consider employment across the Border, particularly for improved pay and career opportunities.
What is the biggest concern for interested workers?
The daily cost of commuting was identified as a leading concern, ahead of tax challenges and poor transport links.
Why are employers struggling with cross-border recruitment?
Employers report uncertainty about tax, payroll, pensions, social insurance, welfare rules and remote working arrangements. These administrative issues can make recruitment more difficult.
What is Transborder Workers’ Relief?
It is a relief that can help some people resident in the Republic who work in Northern Ireland avoid certain additional tax charges on foreign earnings. The report says an equivalent arrangement is not available to Northern Ireland residents working in the Republic under the current UK foreign tax credit system.
What happens next?
The report adds to calls for closer cooperation between the two jurisdictions, but any changes would require coordination between the Irish and UK tax authorities and governments. Until clearer arrangements are introduced, employers and employees will need to seek professional advice before entering a cross-border working agreement.
The wider message is that interest in an all-island labour market already exists. The challenge is to ensure that tax administration, commuting costs and employment protections do not prevent people and businesses from acting on that interest.
Conclusion
Cross-border tax rules are becoming a significant barrier to recruitment and career mobility across Ireland. Workers want access to better pay and opportunities, while employers need skills that may be available just across the Border. Clearer tax guidance, fairer reliefs and better transport links could help unlock that potential and make the all-island labour market more accessible.