The Special Assignee Relief Programme (“SARP”) was introduced on 1st January 2012 to provide Income Tax Relief for eligible employees assigned to work in Ireland from abroad. It was due to expire for new entrants on 31st December 2022, however, Finance Act 2022 extended the relief for a further three years, up until 31st December 2025.
Prior to 1st January 2023, an individual was required to earn a minimum basic salary of €75,000 per annum (excluding all bonuses, benefits or share based remuneration) in order to be eligible for SARP.
From 1st January 2023 onwards the employee must have a minimum base salary of €100,000 per annum. This amount excludes all bonuses, commissions or other similar payments, benefits or share-based remuneration.
A number of conditions need to be satisfied for this relief to apply, as follows:
Mark arrived in Ireland from USA on 17th October 2019 on a 5-year contract.
He was not Irish tax resident in 2019.
As Mark was tax resident in Ireland in 2020, he was entitled to claim relief under SARP.
His first year of claim was, therefore, 2020.
He can continue to claim SARP up to and including 2025 if he continues to satisfy the relevant conditions for the Relief.
The relief operates by:
Relief is not extended to Universal Social Charge (USC) so the individual must pay USC on the full amount of his/her/their salary.
The specified amount is not exempt from PRSI, unless the employee is relieved from paying Irish PRSI under either an EU Regulation or under a bilateral agreement with another jurisdiction.
The relief operates by providing a deduction for income tax purposes from remuneration based on the following formula:
(A-B) X 30%
A = Qualifying Remuneration i.e. total remuneration. This includes:
B = €100,000 (prior to 1st January 2023 it was €75,000)
Thomas arrived in Ireland on 1st January 2023 and meets all the above conditions to qualify for SARP relief.
His salary is €120,000, his bonus is €15,000 and he receives a benefits in kind (e.g. medical insurance) valued at €3,000.
A = €138,000 i.e. €120,000 + €15,000 + €3,000
B = €100,000 i.e. qualifying Income Threshold
SARP Deduction = (€138,000 – €100,000) = €38,000 @ 30% = €11,400
Thomas’s marginal Income Tax rate in Ireland is 40%, therefore his Income Tax saving is €4,560 i.e. €11,400 x 40%
It’s important to keep in mind that 8% USC and 4% PRSI, if applicable, will apply to this employment income.
SARP relief can be claimed by the employee in one of two ways:
An employee who receives SARP Relief is considered to be a “chargeable person” for Income Tax purposes. He/she/they is/are required to submit an Income Tax Return to the Irish Revenue Commissioners in respect of each year for which relief is claimed. The Form 11 Tax Return may be filed by way of a paper form or through the Revenue’s On-Line Service (ROS).
Employees who have registered and qualify for SARP must file a Form 11 Tax Return by 31st October following the end of the tax year.
By completing Part C of Form SARP 1A and submitting it to Revenue, SARP Relief can be granted at source through the employee’s payroll.
The employer is required to make this application only once.
Relief can be granted at source through payroll for the duration of the assignment, up to a maximum of five years, providing the employee continues to satisfy all the relevant conditions.
Today, 14th April 2022. the Irish Revenue published guidance (Revenue eBrief No. 090/22) on the tax treatments of Ukrainians, who continue to be employed by their Ukrainian employer while they perform the duties of their employment, remotely, in Ireland.
The Guidance material outlines a number of concessions which will apply for the 2022 tax year.
As you’re aware, income earned from a non-Irish employment, where the performance of those duties is carried out in Ireland, is liable to Irish payroll taxes irrespective of the employee’s or employer’s tax residence status. However, by concession, the Irish Revenue are prepared to treat Irish-based employees of Ukrainian employers as not being liable to Irish Income Tax and USC in respect of Ukrainian employment income that is attributable to the performance of duties in Ireland.
Ukrainian Employers will not be required to register as employers in Ireland and operate Irish payroll taxes in respect of such income.
Please be aware that this concession only relates to employment income which is (a) paid to an Irish-based employee (b) by their Ukrainian employer.
In order for the above concessions to apply, two conditions must be met:
The Irish Revenue will disregard for Corporation Tax purposes any employee, director, service provider or agent who has come to Ireland because of the war in Ukraine and whose presence here has unavoidably been extended as a result of the war in Ukraine.
Again, such concessionary treatment only applies in circumstances where the relevant person would have been present in Ukraine but for the war there.
For any individual or relevant entity availing of the concessional tax treatment, it is essential that he/she/they retain any documents or other evidence, including records with the individual’s arrival date in Ireland, which clearly shows that the individual’s presence in Ireland and the reason the duties of employment are carried out in the state is due to the war in Ukraine. These records must be retained by the relevant individual or entity as Revenue may request such evidence.
For further information, please follow link: https://www.revenue.ie/en/tax-professionals/ebrief/2022/no-0902022.aspx
On 21st December 2021, the Government announced the expansion of supports for businesses impacted by public health restrictions that came into effect from 20th December 2021 to 31st January 2022 including changes to:
A summary of the developments to the schemes is outlined below.
On 9th December 2021 it was announced that the enhanced subsidy rates under the EWSS will continue until 31st January 2022. In other words these enhanced rates will be paid in respect of payroll submissions which have pay dates in December 2021 and January 2022.
Today, Minister Donohoe confirmed that the EWSS will also be reopened for certain businesses who would not otherwise be eligible for the scheme.
Employers can re-join the scheme from January 2022 if they meet the following conditions:
Employers who qualify for re-entry to the EWSS will receive support from 1st January 2022 onwards. These businesses can remain in the scheme until its expiry date of 30th April 2022.
Please bear in mind that the business must experience a 30% reduction in (a) turnover or (b) customer orders during a particular reference period to qualify.
Businesses that commence trading operations from 1st January 2022 onwards will not be eligible for the scheme.
For further information, please click: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf
From 20th December 2021, the CRSS opens to businesses within the hospitality and indoor entertainment sector such as bars, restaurants and hotels as well as theatres and cinemas that are now required to close by 8pm each night until 31st January 2022.
The eligibility criteria regarding the reduction in turnover has also increased to no more than 40% of 2019 turnover. Previously it was no more than 25% of the 2019 turnover.
Companies, self-employed individuals and partnerships that carry out a taxable trade can apply for the CRSS.
A qualifying person who meets the revised eligibility criteria can make a claim to Revenue in respect of each week that the eligible business/trading activity is affected by the imposed Covid restrictions.
A qualifying person who carries on such a business is eligible to make a payment claim under the Covid Restrictions Support Scheme if:
For businesses established in the period between 13th October 2020 and 26th July 2021, they are eligible to apply for support under the scheme, however, they are first required to register for CRSS via ROS. It will only be possible to make a claim once the business has an active CRSS registration.
If the eligible business meets the revised criteria to qualify for the scheme and has previously received CRSS payments in relation to a business premises carrying out a trading activity which was affected by the current public health restrictions, this business can make a CRSS claim using the ROS e-Repayments facility from 22nd December 2022.
Claims can be made in blocks of up to three weeks at a time. The respective amounts due will be paid by Revenue in one single payment. The normal repayment period is three days from the date the claim was submitted.
In circumstances where a qualifying person carries on more than one eligible business activity from separate/different business premises, then it is possible to make a separate claim in relation to each trading /business activity.
If it’s possible for the business to reopen without having to prevent or significantly restrict access to it’s premises, then this business will not qualify for CRSS. A business will not be eligible for the CRSS for periods where it chooses or decides not to open.
In situations where it is not feasible for a qualifying person to continue carrying on a relevant business activity during the period of restrictions, a claim for support under the CRSS can still be made. This is on condition that the eligibility criteria have been met. In order to qualify, the person must have actively carried on the relevant business activity up to the date the latest public health restrictions were imposed and must intend to continue carrying on that same activity once those restrictions have been eased.
The weekly payment is calculated as follows
For the purposes of the CRSS, the “Average weekly turnover” is defined as:
For further information, please click the link: https://www.revenue.ie/en/corporate/press-office/budget-information/2021/crss-guidelines.pdf
The Revenue Commissioners have confirmed that November/December 2021 VAT liabilities and December 2021 PAYE (Employer) liabilities will be automatically warehoused for businesses which are already availing of the scheme.
The Government confirmed that the Covid restricted trading phase of the Debt Warehousing Scheme (Period 1) will be extended by three months to 31st March 2022 for taxpayers who are eligible for the COVID-19 support schemes. This effectively means that tax debts arising for such affected businesses in the first three months of 2022 can be warehoused.
The zero interest phase of the Debt Warehousing Scheme or Period 2 will begin on 1st April 2022 for those businesses and will run until 31st March 2023.
For further information, please click the link: https://www.revenue.ie/en/corporate/communications/documents/debt-warehousing-reduced-interest-measures.pdf
The Finance (Covid-19 and Miscellaneous Provisions) Bill 2021 has extended the Employment Wage Subsidy Scheme (EWSS) until 31st December 2021.
It also amended the comparison periods for determining eligibility for EWSS for pay dates from 1st July 2021.
The main criterion for eligibility is that employers must be able to prove that they were operating at no more than 70% of either (a) turnover or (b) customer orders received for the period 1st January to 30th June 2021 as compared with 1st January to 30th June 2019. It must also be able to clearly demonstrate that this disruption was caused by Covid19.
In other words, an employer must be able to show, to the satisfaction of Revenue Commissioners, that their business is expected to suffer a 30% reduction in turnover or customer orders, which was due to Covid19.
Simultaneously, Revenue introduced a new requirement for employers to submit a monthly Eligibility Review Form (ERF) on ROS. The ERF requires (a) data relating to actual monthly VAT exclusive turnover or customers order values for 2019 in addition to actual and projected figures for 2021 for all relevant businesses as well as (b) a declaration.
The initial submission should be made between 21st and 30th July 2021 and by 15th of every month from August onwards.
On 15th of every month during the operation of this scheme, employers will be required to provide the actual results for the previous month, together with a review of the original projections they provided so as to ensure they continue to remain valid.
The eligibility for EWSS must be reviewed on the last day of each month. If the business is deemed ineligible, then that business must de-register for EWSS from the following day.
If, however, the situation changes, then the business can re-register again.
The following subsidy rates, based on employee’s gross pay per week, will continue to apply for the months of July, August and September 2021 as follows:
For further information please visit: https://www.revenue.ie/en/employing-people/ewss/how-to-claim-for-employees-and-subsidy-rates.aspx
In response to the Covid-19 outbreak in Ireland, the Government has asked people to take all necessary measures to reduce the spread of the virus and where possible individuals are being asked to work from home.
Today Revenue updated their e-Working and Tax guidance manual (i.e. Revenue eBrief No. 045/20) in which it published Government’s recommendation as to how employers can allow employees to work from home.
The content of Tax and Duty Manual Part 05-02-13 has been updated to include:
Revenue has defined e-working to be where an employee works:
The guidance material goes on to state that e-working involves:
The revised Revenue guidance clarifies that the following conditions must also be met:
The guidance confirms that e-working arrangements do not apply to individuals who in the normal course of their employment bring work home outside standard working hours.
It would appear from the updated material, that where there is an occasional and ancillary element to work completed from home, the e-working provisions will not apply.
The revised guidance does not specify what a “formal agreement” between the employer and employee might contain therefore it would be advisable for businesses/employers going forward to consider putting in place a formal structure for employees looking to avail of the e-worker relief in the future.
The guidance material states in broad terms that employees forced to work from home due to the Covid crisis can claim a tax credit.
“Where the Government recommends that employers allow employees to work from home to support national public health objectives, as in the case of Covid-19, the employer may pay the employee up to €3.20 per day to cover the additional costs of working from home. If the employer does not make this payment, the employee may be entitled to make a claim under section 114 TCA 1997 in respect of vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of the employment”.
The revised guidance advises that employers must retain records of all tax-free allowance payments to employees.
In situations where an employee is working from their home but undertakes business travel on a particular day and subsequently claims travel and subsistence expenses, please be aware that if the e-workers daily allowance is also claimed by that employee for the same day, then it will be disallowed and instead, treated as normal pay in the hands of the employee/e-worker i.e. it will be subject to payroll taxes.
Where an employee qualifies as an e-worker, an employer can provide the following equipment for use at home where a benefit-in-kind (BIK) charge will not arise provided any private use is incidental:
There is no additional USC liability imposed on the provision of this work-related equipment to an employee.
Please be aware, however, that laptops, computers, office equipment and office furniture purchased by an employee are not allowable deductions under s. 114 of the Taxes Consolidation Act (TCA) 1997.
e-Working expenses can be claimed by completing an Income Tax return. An individual can complete this form on the Revenue website as follows:
As a claim may be selected for future examination, all documentation relating to a claim should be retained for a period of six years from the end of the tax year to which the claim relates.
Finally, for employees who meet the relevant conditions and are deemed qualify as e-workers:
For further information, please follow the link: https://www.revenue.ie/en/tax-professionals/ebrief/2020/no-0452020.aspx
It’s very difficult to keep up to date with all the amendments to the Irish tax system so here is a summary of some of the changes to be mindful of in 2018:
1. Annual Membership Fees paid to a professional body (Revenue eBrief 04/18 published on 9th January 2018)
The updated Revenue guidance notes allow an employee to claim a deduction for professional membership fees only in circumstances where:
Where the employer pays the membership fee on the employee’s behalf and either of the above two conditions apply then no Benefit-in-Kind is deemed to have arisen. Subsequently no payroll taxes will arise.
We would advise all employers to ensure the payment of professional membership fees on behalf of employees can be supported in the event of a Revenue Audit.
2. Increase in Employer’s Pay Related Social Insurance from 10.75% to 10.85% from 1st January 2018.
3. Benefit-in-Kind Exemption of Electric Vehicles for 2018.
Finance Act 2017 introduced this exemption for electric vehicles which were available for private use for employees during the 2018 tax year. It is not clear whether or not this scheme will be extended into 2019 which may result in a low uptake in purchasing electric vehicles by employers.
The exemption applies to cars and vans deriving their power from an electric motor.
It does not apply to hybrid vehicles.
4. PAYE Modernisation or Real Time Reporting
From 1st January 2019 all employers will be required to accurately provide PAYE data to Revenue on a Real Time basis.
This effectively means:
For further information, please follow the link:
We would advise all employers to take the time, sooner rather than later, to ensure their payroll processes will be adequate to handle the increased obligations of the Real Time Reporting.
Here is a list of other relevant Revenue eBriefs:
Home Carer Tax Credit – Revenue eBrief No. 009/18 (29 January 2018) https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0092018.aspx
Change in Basis of Assessment – Schedule E – Revenue eBrief No. 127/17 (29 December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1272017.aspx
Taxation of payments to craft apprentices by Education and Training Boards –Revenue eBrief No. 126/17 (29 December 2017)
Benefit-in-Kind on use of Company Vans – Revenue eBrief No. 124/17 (28th December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1242017.aspx
Exemption from Income Tax in respect of certain payments made under employment law – Revenue eBrief No. 118/17 (20 December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1182017.aspx
PAYE Services: Tax and Duty Manual Updates – Revenue eBrief No. 111/17 (01 December 2017) https://www.revenue.ie/en/tax-professionals/ebrief/2017/no-1112017.aspx
Amendments to the Employment and Investment Incentive on 2nd November 2017 – Revenue eBrief No. 99/17 (02 November 2017)