Ukrainians who are under Temporary Protection and living in the Irish state are not liable for tax if they continue to work for an employer who is based in Ukraine, according to a response to a Parliamentary Question from Rural Independent TD for Laois/Offaly, Carol Nolan.
Deputy Nolan had asked the Minister for Finance, Michael McGrath, whether “beneficiaries of temporary protection working remotely in Ireland for Ukrainian employers are not subject to the payment of tax in Ireland until 2025; if there are proposals to extend this beyond 2025.”
In his response, the Minister stated that:
(B)y way of concession, Ukrainians who came to the State as a result of the war in their country and who continue to be employed by their Ukrainian employer are treated as not being liable to income tax and USC on the employment income which is attributable to the performance of their Ukrainian employment duties in Ireland. This treatment applies solely to employment income that is paid to the Irish-based employees by their Ukrainian employer and not to any other income.
Those who avail of this concession are those who “would have performed the duties of his/her employment in Ukraine but for the war there,” and who must “remain subject to Ukrainian income tax on his or her employment income for the tax year.” The concessionary tax treatment which has been in place since 2023 will come to an end from January 1, 2025.
The briefing document that is mentioned by the Minister also makes it clear that Ukrainian companies who have relocated their operations to continue remotely from within the state are exempt from Corporation Tax.
All of which raises interesting questions about how and in what part of a country at war these businesses can apparently continue to operate relatively normally if they are able to conduct their affairs remotely while under Temporary Protection as persons who have left Ukraine because of that war.
A European Parliament briefing paper makes it clear that the taxation of Ukrainian refugees is an “exclusive competence” of the member states, and that a key issue is that of double taxation. In effect, what the Irish state is doing is setting aside the “183 day rule” which normally requires that if you spend 183 days or more in a country that you are subject to domestic taxation on income.
Other EU states such as the Netherlands require that Ukrainian refugees submit an income tax return form and are compliant with domestic taxation regulations. Nor is there any reference to any similar tax concessions for Ukrainian refugees in the United Kingdom.
In Germany it has been reported that just 20% of adult refugees are working but this is attributed mostly to generous personal welfare supports.
It is difficult to know how much of an outlier Ireland is regarding tax concessions as it clearly was in other benefits which came under scrutiny and revision earlier in the year.
The Ukrainian government had argued that the same criteria ought to be applied to Ukrainians situated outside of Ukraine but still working for Ukrainian companies as was applied to persons temporarily relocated due to the Covid travel restrictions.
The obvious problems and potential scope for abuse of all of this are supposed to be addressed by the notification to the Ukrainian government under the OECD’s Common Reporting Standard when a Ukrainian citizen opens a bank account in the country in which they are under Temporary Protection.