The Special Assignee Relief Programme (SARP) is 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 of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.
Earlier this year, I commissioned an independent review of the scheme which was carried out by Indecon Economic Consultants. In their report, Indecon confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy.
Ireland’s enterprise policy is based on export-led growth; 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 market failure that would not be addressed if not for the continued existence of SARP.
The benefits of SARP, aside from enhancing our international competitiveness, are detailed clearly in the Indecon report and they include:
- Increased employment and retention of staff within SARP companies;
- Associated additional investment in the economy of the order of €25 million;
- Additional Corporation Tax receipts;
- Additional PAYE receipts; and
- R&D spillover activity.
The Indecon report also highlights the following data regarding companies that availed of SARP for the year 2017:
- they paid over €2.5 billion in corporation tax;
- they employed over 155,00 individuals; and,
- they paid over €1.9 billion in PAYE taxes.
On the basis of these findings, and in the interests of providing certainty for potential beneficiary firms, I am providing for the extension of SARP in Finance Bill 2019 until 31 December 2022 from the current sunset date of 31 December 2020.
More generally in relation to SARP, there is of course a balance to be struck between the principle of horizontal equity within the tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type just recently carried out by Indecon.
The ‘Key Employee Engagement Programme’ (KEEP) was introduced in Budget 2018 and has the objective of supporting SMEs in Ireland in competing with larger enterprises to recruit and retain key employees. Smaller and/or younger companies with growth potential may not have the cash resources available to offer comparable salary packages to those offered by large, established businesses. However, where the employee believes in the growth potential of the firm, and by extension the potential for the company shares to increase in value, remuneration in the form of share options may improve the attractiveness of the SME employment offer.
International research has shown that Employee Financial Participation can be effective in fostering partnership and increasing competitiveness and in helping companies to attract and retain staff in a competitive international labour market. Improved competiveness of companies supports the creation and maintenance of employment, and this in turn supports economic growth which benefits the economy as a whole.
Finance Bill 2019 provides for a number of enhancements to the KEEP scheme which are primarily aimed at improving the accessibility of the scheme to SMEs, and allowing more flexible and family-friendly working arrangements to qualify under the scheme.