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, Minister for Finance, Paschal Donohoe T.D., and Minister for Public Expenditure and Reform, Michael McGrath T.D. presented Budget 2023.
Minister Donohoe announced an extension to a number of existing personal tax reliefs including:
Key measures include:
The scheme will continue at current rates for another two years and will expire on 31st December 2024
Vacant Homes Tax (“VHT”)
A VHT will apply to residential properties which are occupied for less than 30 days in a 12 month period.
Exemptions will apply where the property is vacant for “genuine reasons.”
The applicable tax rate is three times the existing local property tax (“LPT”) rate
Residential Development Stamp Duty Refund Scheme
The stamp duty refund scheme will continue until the end of 2025.
The stamp duty residential land rebate scheme allows for a refund of eleven-fifteenths of the stamp duty paid on land that is subsequently developed for residential purposes. was due to expire on 31 December 2022. It has been extended to the end of 2025.
Pre-letting Expenses on Certain Vacant Residential Properties
The limit for landlords claiming allowable pre-letting expenses is to be increased from €5,000 to €10,000.
The vacancy period is to be reduced from 12 months to 6 months.
Levy on Concrete Blocks, Pouring Concrete and other Concrete Products
A 10% levy was announced in response to the significant funding required in respect of the defective blocks redress scheme. A 10% levy will be applied to concrete blocks, pouring concrete, and certain other concrete products
This levy applies from 3rd April 2023.
9% VAT rate for hospitality and tourism sector
The 9% VAT rate currently in place to support the tourism and hospitality sectors will continue until 28th February 2023.
9% VAT rate on electricity and gas supplies
The temporary reduction in the VAT rate applicable to gas and electricity supplies (from 13.5% to 9%) will be extended to 28th February 2023.
Farmers’ Flat-Rate Addition
The flat-rate addition is being reduced from 5.5% to 5% in accordance with criteria set out in the EU VAT Directive.
This change will apply from 1st January 2023.
From 1st January 2023 VAT on newspapers, including digital editions will be reduced from 9% to 0%.