Overcoming the Cross-Border conundrum

Two currencies. Two different tax regimes. One island. Sound familiar?

If you operate cross-border, you’ll already understand both the opportunities and the challenges this presents. On one hand, establishing a presence south of the border means rapid entry into a new market and the EU. On the other hand, what can feel like an invisible border suddenly becomes very visible when it comes to navigating HMRC and Revenue, differing payroll and pension obligations, currency exposure, and two different regulatory frameworks. Add remote or hybrid workers into the mix, and complexity increases even further.

Challenging? Maybe. But it won’t deter your expansion. With more than 90% of our clients operating cross-border, we understand what it takes to help Northern Irish and Irish-based businesses grow sustainably and compliantly. Whether you are entering the Irish market for the first time or reviewing existing processes, we meet you where you are.

In which jurisdiction should my employees pay tax?

We’ll start with the question we get asked most: Where are my employees liable for tax? It sounds simple but unfortunately, it’s not. It depends on several factors, including where the employee lives, where they perform their work duties, how many days they spend working in each jurisdiction, and which legal entity employs and pays them. For businesses with mobile sales teams, hybrid workers, or employees regularly travelling back and forth, accurate recordkeeping is vital. The employee’s tax residency will also determine where they need to file their personal income tax return. It is therefore important to understand their current position and the factors that could trigger change.

The rise of the ‘nomad’ worker

We recently advised on a payroll case involving a sales manager who lived in Newry but travelled regularly to Dublin while also working remotely on certain days. Initially, the company assumed the employee would fall under the UK tax system because payroll was processed through the Northern Ireland entity.

However, once we reviewed the employee’s working pattern, it became clear that a significant proportion of their work was being conducted in the Republic of Ireland. This immediately raised wider considerations around Irish income tax, PRSI liabilities, and payroll reporting requirements, despite the employee remaining UK-based.

Scenarios like these are becoming increasingly common, particularly as businesses become more remote. The challenge is not simply where an employee lives, but where they carry out their duties and how often they cross the border for work. Maintaining records around remote working days, travel, and where work is carried out has become an essential process for cross-border operations. Only then can you ensure the correct tax, payroll and reporting obligations are met.

Payroll, pensions and compliance

Payroll is an area where businesses can underestimate the operational differences between the two regions. While PAYE operates in both, the models are quite different. A good example of this is child benefit. In Ireland, it’s paid to all employees with children, whereas in Northern Ireland if employees earn over £60,000, child benefit is reduced and removed altogether where employees earn over £80,000. And there are many more examples like this.

PRSI and NIC’s need to be managed carefully for cross-border workers. Failing to manage this correctly can lead to penalties, backdated liabilities, and issues with benefit entitlements like illness benefit and maternity leave.

Pensions, too need to be considered. The Pension Auto Enrolment regime was introduced in the Republic in January 2026. In place in the UK since 2012, UK employers are much more familiar with the concept, however for a cross-border business navigating both schemes, as well as (potentially) an in-house pension scheme, it is undoubtedly a challenge.

Corporation Level Complexity

Corporation tax differences, too, need careful consideration. Group structures, transfer pricing, and intercompany arrangements all need to be managed carefully when operating on both sides of the border. We are here to ensure you have a structure in place that supports commercial growth while remaining tax-efficient and compliant. That means knowing every allowable deduction/credit available, every budget announcement, every updated guidance.

Ireland Inc. and Beyond

The key point is this: cross-border businesses can be and are hugely successful, and not just on this island. Ireland Inc. is a global success story, with businesses expanding far beyond our local markets. But that kind of growth is rarely achieved alone. It takes the right expertise and support. At AAB, we are here to partner with you at every stage of your cross-border journey. And when you are ready to expand beyond this island, we are here for that too.