Tuesday, 9 April 2019

Questions (159)

Thomas P. Broughan


159. Deputy Thomas P. Broughan asked the Minister for Finance the estimated amount that could be raised by abolishing the special assignee relief programme introduced in 2014 to provide a tax reduction to high earners that locate here for work purposes; and if he will make a statement on the matter. [16456/19]

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Written answers (Question to Finance)

The Special Assignee Relief Programme (SARP) was introduced in Budget 2012 as part of a strategy to promote Foreign Direct Investment into Ireland, and to allow us to compete internationally to attract highly skilled and mobile executives who act as key decision makers within organisations.

The measure provides income tax relief on a portion of income earned by employees, who are assigned by their employer to work in Ireland, and who previously worked abroad for that employer for a minimum of six months. There is no exemption or relief from USC and PRSI is payable where the individual is not liable to social insurance contributions in their home country.

The 2016 annual Revenue report on SARP shows that for the years 2012 to 2016 (the most recent year for which data are available) the annual cost of the measure was as follows:

Tax Cost 2012

Tax Cost 2013

Tax Cost 2014

Tax Cost 2015

Tax Cost 2016

€0.1 million

€1.9 million

€5.9 million

€9.5 million

€18.1 million

The incentive has been subject to a number of amendments during the course of its existence, with the intention of ensuring adequate uptake and also the efficiency and effectiveness of its operation.

As such, the costs represented in the above table are reflective of the eligibility criteria that applied in each year, particularly with regard to the quantum of relief that was available in a given year.

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.

Following on from concerns I had regarding the increasing cost of the incentive, I amended the SARP legislation in Finance Bill 2018 to reinstate an upper salary threshold at the level of €1 million. This change came into effect for new entrants to the programme from 1 January 2019 and for existing beneficiaries of the programme from 1 January 2020.

I do not believe it is possible to accurately estimate the amount that could be raised by abolishing SARP. While the annual cost of the incentive, as outlined in the table above, could be represented as a saving to the Exchequer were SARP abolished, there would likely be losses resulting from lower SARP related employment levels (reduced tax receipts) and other indirect effects within the activities that are supported by the Programme.

Finally, as the Deputy may be aware, SARP will be fully reviewed in 2019 ahead of Finance Bill 2019. This review will afford an opportunity to look at all elements of the relief. It will also include consultation with all relevant stakeholders.