Dáil Éireann Debate, Tuesday - 9 November 2021
103. Deputy Richard Boyd Barrett asked the Minister for Finance if he has considered ending the Special Assignee Relief Programme in the interests of just taxation; and if he will make a statement on the matter. [54399/21]
View answer144. Deputy Catherine Connolly asked the Minister for Finance his plans to phase out the Special Assignee Relief Programme; and if he will make a statement on the matter. [54378/21]
View answerI propose to take Questions Nos. 103 and 144 together.
The Finance Act 2012 introduced section 825C to the Taxes Consolidation Act, 1997. This section, as amended, provides Income Tax relief for certain individuals assigned during any of the tax years 2012 to 2022 to work in the State. The relief is commonly known as SARP (Special Assignee Relief Programme).
SARP provides for relief from Income Tax on 30% of income over €75,000, subject to an upper income threshold, where applicable. There is no exemption from USC. PRSI is payable where the individual is not liable to social insurance contributions in his or her home country. School fees of up to €5,000 per annum and expenses incurred on one trip home per year, where they are paid for by the employer, are not subject to Income Tax, USC or PRSI.
The scheme is an incentive designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad, to take up positions in the Irish-based operations, thereby facilitating skills transfer and the creation of jobs and the development and expansion of businesses in Ireland. The most recent data on SARP can be found in the 2019 Revenue report, available at www.revenue.ie/en/corporate/documents/research/sarp-report-2019.pdf.
According to that report, the numbers of persons who availed of SARP in the period 2012 to 2019 (the most recent year for which data are available) are as follows:
|
Year |
Applications received |
|
2016 |
<10* |
|
2017 |
<10 |
|
2018 |
16 |
|
2019 |
19 |
|
2020 |
33 |
|
2021 |
33 |
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
11 |
121 |
302 |
586 |
793 |
1,084 |
1,481 |
1,574 |
The cost of the scheme for those years is as follows (€m):
|
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
|
0.1 |
1.9 |
5.9 |
9.5 |
18.1 |
28.1 |
42.4 |
38.2 |
The 2019 Revenue report indicates a significant reversal in the overall cost of the scheme as compared with 2018. This is attributable at least in part, to my decision to introduce in Finance Act 2018 a salary cap of €1m on the amount of a person's income that can benefit from the scheme. The change applied from 1 January 2019 for new entrants and from 1 January 2020 for existing recipients.
Furthermore, the aggregate number of jobs that were reported as created and retained as a result of the scheme has increased since 2018. There were 379 additional employees compared with 236 in 2018 and the number of employees retained was 483, compared with 348 in 2018. This combined total of 862 SARP-related jobs in 2019 represents a cost of €44,000 per job created or retained, a decrease in cost per job compared with 2018, when there were 584 SARP supported jobs at an average cost of €73,000 each. This represents a decrease in cost of over 39%.
In terms of the continuation of the scheme, it is important for the Deputies to note that Ireland’s enterprise policy is based on export-led growth and Foreign Direct Investment has been, and continues to be, an integral part of Ireland’s economic development. The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. The competition for this talent is intense, particularly for the types of skills required to facilitate the development and expansion of businesses in Ireland.
The existence of similar (and indeed more attractive) special assignee type tax reliefs in a number of competitor jurisdictions creates a competitive disparity that would not be addressed if not for the continued existence of SARP.
Aside from enhancing our international competitiveness, the benefits of SARP, as detailed in the 2019 Indecon report on the measure, available on my Department's website, include:
- Increased employment and retention of staff within SARP companies;
- Associated additional investment in the economy;
- Additional Corporation Tax receipts;
- Additional PAYE receipts; and
- R&D spillover activity.
In line with my Department's Tax Expenditure Guidelines, SARP will be reviewed before its sunset date of 31 December 2022. In the meantime, there are no plans to phase out the relief as suggested by Deputy Connolly.
