Crackdown on Contract Workers?

The Sunday Business Post reported on January 10 last that the forthcoming Finance Bill will include plans to bring thousands of contract employees into the PAYE net for the first time.

The mooted changes are designed to ensure that a contractor who is a de-facto employee cannot avoid PAYE by being paid through their own limited company.

Until the Finance Bill is published in early February, we will not know whether this measure will become a reality. If it does, it is likely to hit both contractors and the companies who hire them.

Its effects would be most serious for IT specialists and other contract professionals and technicians who contract to Irish industry including the multinational sector. This sector has already been badly exposed to the downturn in the world economy and is unlikely to welcome any further increase in their Irish cost base.

If you are a contractor operating through a limited company, or subcontracting work to others in this manner, you should keep a close eye on developments in this area.

3 Responses to Crackdown on Contract Workers?

  1. Hi Tommy,

    Am I right in thinking that the Finance Bill didn’t implement anything in this regard, despite what the SBP predicted?

    Congrats on the blog, by the way – some very interesting reading!

    Liam

    • Yes Liam, there was no mention of this issue in the Finance Bill. It’s still possible that the issue might be included in a later amendment to the Bill, before it becomes law as the Finance Act.

      My guess is that there will be no such changes this year. The Finance Bill already includes significant changes which affect Irish-based multinationals, particularly the changes on transfer pricing and residence rules. Any changes to contractor taxation rules will affect the multinationals more than any other sector. Introducing fresh regulations in this area might be a bit too much for the multinationals to handles this year, especially when the government is fighting to maintain the confidence of external investors in the economy.

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