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The COVID-19 crisis has had a profound impact on the way we live, interact and work. As government policy over the last number of months has advised (1) working from home where possible and (2) against non-essential local and international travel, working from home (WFH) has become the norm for many employees.

For most employees, WFH has meant confining themselves to the desk or kitchen table from their house/apartment/flat-share a few miles from the office, always on the basis that a return to the office is inevitable and not long away. For other employees, WFH has meant a return to a familial home, in many cases, outside of Dublin. We are also seeing companies, in the technology sector in particular, agreeing to facilitate WFH arrangements on a permanent basis.

Working remotely from other parts of the Republic of Ireland is one thing but many employers have found themselves grappling with the fact that remote working, and usually a return “home”, has meant trying to manage employees who have gone to other countries/jurisdictions. We look at some of the considerations and implications for Irish employers dealing with this new phenomenon of having employees scattered across the globe.

Applicable employment laws

For the purposes of this note, we are going to assume that the employees in question are employed by an Irish entity with contracts of employment governed by Irish law. This works fine when an employee is located and working in and from Ireland. The position becomes complicated however if an employee then ends up working in another jurisdiction.

The Rome Convention, to which Ireland is a signatory, provides in very simple terms that the parties to a contract can choose the laws which apply to that contract. However, there are some exceptions to this rule. One of the exceptions is that the parties to an employment contract cannot contract out of the mandatory employment laws of the country in which the employee works.

It is our view that if an employee works remotely in a different country for a relatively short period on the strict and express understanding that it is a very temporary arrangement, it is unlikely that the mandatory employment laws of the country from which the employee is working remotely will be applicable. However, we have no clarity on what point the mandatory employment laws of the country from which the employee is working remotely will apply. Ultimately it will be a matter for the courts and tribunals of that country but the applicability of foreign laws to the employment relationship is certainly something employers should be cognisant of.

Taxation of employees

If employees of an Irish employer are working outside of Ireland, this could also have foreign payroll tax implications for the Irish employer. The foreign country may seek to tax employment income where the employee is carrying out the duties of his/her employment in that country. For countries with which Ireland has a double tax treaty, the treaty will limit the ability of the other country to tax income arising to an Irish resident individual. Typically the treaty provides that the employment income is not taxable if the individual is present in the other country for less than 183 days and is working for an Irish employer which is not operating through a fixed base/permanent establishment in the other country. However, the specific facts and local rules should be examined to assess what foreign tax (and social security) obligations arise in the particular circumstances and whether the other country has relaxed its normal rules in light of Covid-19 travel restrictions. The employees would also need to consider their personal tax situation if they spend enough time in the foreign country to become tax resident there.

Permanent establishment

A permanent establishment (PE) is a taxable presence of an entity resident in another country. Where a company has a PE in another country, the profits attributable to the foreign PE may be taxed in the other country.

In broad terms, a PE can be created if an employee concludes contracts in another country and/or if the company is considered to have a “fixed place of business” in the other country. In certain cases, a home office could be a fixed place of business, depending on the specific arrangements and the length of the WFH arrangement. It is therefore very important that employers give consideration to the role occupied by the employee working in a foreign jurisdiction and the working arrangements so as to ensure that allowing an employee to work from a foreign country does not have the effect of unwittingly creating a PE in that country.


For Irish employers with employees WFH in foreign jurisdictions even on a temporary basis, some consideration should be given, sooner rather than later to (a) the applicability for local employment laws; and (2) foreign obligations as regards employment and corporate taxes. Ultimately these will be matters of local law and our very strong recommendation is that employers seek advice from local counsel. Employers who do not turn their attention to these issues in the short-to-medium term could end up with significant exposure to local employment laws, local employment taxes and social insurance contributions, plus interest and penalties. In addition, and perhaps more importantly, companies could be saddled with permanent and taxable establishments in countries where there was never any intention to set up business.

For more information and expert advice on these matters, contact a member of our Employment & Benefits or Tax teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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