There may not be a need for tax breaks for remote working, a paper by the Tax Strategy Group has claimed.
The document says it isn't clear that there is in fact a "market failure" that requires state intervention as both employees and employers already appear to support the move towards a remote working model, with evidence of such moves underway.
"Given the scale of support for some degree of remote working, there is likely to be a very large deadweight factor associated with any new tax expenditure to incentivise remote working at employee level," the group claims.
The paper also says there are equity concerns from the perspective of the personal income tax system, as well as broader policy questions around the potential for shifting elements of the traditional costs associated with being an employer from employers to the State.
"Thus, if Department of Finance Tax Expenditure Guidelines are the sole frame of reference against which a decision should be made, the case for introducing enhanced supports for remote working through the tax system is not a strong one," it says.
But the analysis also points out that in the context of a whole of Government policy to facilitate and support remote working, it may be considered appropriate nonetheless to enhance or amend the current tax arrangements in order to "underline and reinforce the public policy decisions in this area."
It says current tax arrangements around remote working are operated by Revenue on an administrative basis, but could be formalised by putting forward legislative amendments, putting the current situation on a statutory footing.
"This would have the benefit of providing certainty to employees and employers," it says.
The paper also suggests that a per-diem working from home tax relief could be introduced, worth €1.50 per day, for example.
This could be introduced and claimed by employees on a self-assessment basis, it says.
However, the TSG says stakeholders are believed to prefer a stand-alone remote working tax credit.
"Such a measure would provide an attractive benefit to remote workers and the use of credits would allow the measure to be implemented quickly for 2022," it says.
But the group says this wouldn't solve the issues of deadweight, inefficiencies and deadweight.
Revenue puts the cost of this type of credit at around €25m for every €50 of credit provided.
Another proposal, put forward by the Department of Enterprise, Trade and Employment, would see the current tax arrangements around remote working enhanced by increasing the percentage limits for electricity and heat that can be currently claimed to either 20% or 30%.
One other possibility, the TSG outlines, would be to increase the tax credit for all PAYE and self-employed workers.
Stakeholders also proposed that a similar scheme to the UK’s temporary "super" accelerated capital allowances scheme could be introduced, that would allow tax deductions worth a multiple of the cost of specific working from home equipment.
