Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, proposes changes to Special Assignee Relief Programme

The Special Assignee Relief Programme (SARP) was introduced in Finance Act 2012. The aim of the programme is to reduce the cost to employers of assigning skilled individuals in their companies from abroad to take up positions in their Irish based operations.

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, announced today that he proposes to bring forward amendments to the operation of the programme at Report Stage of Finance Bill 2018 in the coming weeks.

The Revenue Commissioners prepare an annual analysis of SARP. The 2016 report (published today) notes that the cost of SARP has risen significantly to €18.1 million in 2016 from €9.5 million in 2015 and €5.9 million in 2014. The increase in cost is related to the removal of the cap of €500,000 in eligible income in Finance Act 2015 and a substantial growth in very high earners availing of the relief.

Speaking today, Minister Donohoe said:

“In light of the information on the tax expenditure costs of the programme set out in the report, I propose to bring forward at Dáil Report Stage of the Finance Bill, amendments to s. 825C of the Taxes Consolidation Act 1997 to place a ceiling on eligible income for SARP recipients at €1m. This change would be effective for new entrants to the programme from 1 January 2019 and for existing beneficiaries of the programme from 1 January 2020.”

The Programme will be subject to a full review in 2019 in accordance with the Department of Finance Tax Expenditure Guidelines. The review will look at all aspects of the programme, including its effectiveness in creating employment and assisting business expansion.

Notes

For the tax years 2012, 2013 and 2014, SARP provided relief from income tax on 30% of salary between €75,000 and €500,000. In 2015, the upper salary threshold of €500,000 per annum was removed to encourage senior decision makers to come to Ireland. There is no exemption from USC and PRSI is payable where the individual is not liable to social insurance contributions in their home country. School fees of up to €5,000 and one trip home per year are exempt from tax where they are paid for by the individual’s employer.

In Finance Act 2014, following a review of the incentive, the following changes were made:

The upper income cap on eligibility was removed;
The requirement for an individual to have been a full time employee for 12 months prior to his or her arrival in Ireland was reduced to 6 months;
The requirement regarding tax residence was amended to ensure that individuals who are tax resident in Ireland will qualify;
The restriction on the performance of duties outside the State was removed; and
The reporting obligations of employers was strengthened.

In Finance Act 2016, the relief was extended to end-2020.

The 2016 report shows that while the initial uptake of the scheme was low, the numbers of claimants continues to increase, with a greater than proportionate increase in cost, as shown in the table below:

Year	Claimants	Cost
2012	11	€0.1 million
2013	121	€1.9 million
2014	302	€5.9 million
2015	586	€9.5 million
2016	793	€18.1 Million

The sectors of the economy in which the assignees are located are spread across IT, Financial Services, Pharmaceutical and Medical, Consumer and Industrial and Other services. This shows that the incentive continues to reach a broad range of commercial sectors.