The Special Assignee Relief Programme ("SARP") was introduced in 2012 to provide a targeted income tax relief for eligible employees assigned to work in Ireland by their employer companies. The relief operates by exempting 30% of a qualifying employee's annual employment income above a qualifying income threshold from the charge to income tax (subject to an earnings cap of €1m) for a period of 5 years. Employees who qualify for SARP are also eligible to receive on a tax-free basis certain travel expenses and certain costs associated with the education of their children in Ireland. In this way, the availability of SARP can be a decisive factor in the decision of highly skilled senior executives to relocate to Ireland.
Relief Extended to 2025
SARP was due to expire for new entrants on 31 December 2022. However, Finance Act 2022 has extended the relief for a further three years to 31 December 2025, thereby permitting qualifying employees who arrive in Ireland in each of years 2023 to 2025 to benefit from SARP.
Changes to Existing Qualifying Conditions for 2023 Onwards
Prior to 1 January 2023, an individual had 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. The income threshold in order to be eligible to avail of SARP has been increased from €75,000 to €100,000 for individuals who arrive in Ireland in the years 2023 to 2025. Existing claimants are not affected by the change. In the case of new entrants arriving in Ireland from 1 January 2023 onwards, the portion of their employment income which is eligible for relief is 30% of their annual employment income above €100,000 (whereas qualifying employees who arrived in Ireland prior to 1 January 2023 have their relief calculated as 30% of their annual employment income above €75,000).
New Qualifying Conditions for 2023 Onwards
Finance Act 2022 adds some additional requirements to qualify for SARP with effect from 1 January 2023; namely that:
- the individual must obtain a PPS number;
- the employer company must certify compliance with this condition (ie, that a PPS number has been obtained) to Irish Revenue within 90 days of the individual's arrival in Ireland; and
- the employer company must have complied with the normal PAYE employee commencement regulations (ie, to send various particulars concerning the employee to Irish Revenue at the commencement of the employment to enable the registration of the employment for PAYE purposes).
There is a legislative requirement that an employer submits the SARP application within 90 days of the employee's arrival in Ireland. Failure to adhere to the 90 day time limit will result in the refusal of SARP relief. There is an expectation on Irish Revenue's part that a fully completed SARP application is submitted to them within this 90 day timeframe. Historically, Irish Revenue's practice was to accept SARP applications without PPS numbers (where delays were encountered in obtaining PPS numbers) and to postpone processing such SARP applications until a PPS number was provided to them. However, the latest Irish Revenue manual on SARP relief notes that a "failure to meet the PPSN requirements on time will jeopardise the employee’s entitlement to the relief for the duration of his or her contract." That said, Irish Revenue's SARP manual does note that where an employer cannot fully complete all the information required on a SARP application form due to extenuating circumstances wholly outside the employer's control (eg, delays in an employee providing a PPS number), the employer should submit the SARP application form with all other required information included within the required 90-day filing deadline and provide a brief note explaining the reason for the missing information. The differing comments in the Irish Revenue SARP manual would appear to be somewhat contradictory.
Key Takeaway for Employers
The extension of SARP until the end of 2025 may assist multinational companies in continuing to encourage senior executives to relocate to Ireland.
Employers need to be aware of the additional requirements that need to be satisfied to qualify for SARP from 1 January 2023 onwards. In particular, employers should ensure that individuals relocating to Ireland are aware of the requirement to obtain a PPS number as quickly as possible (given there is now a legislative requirement to submit this number with the SARP application within 90 days of the individual's arrival in Ireland). Employers should provide appropriate assistance, where required, to ensure that the individual's PPS number application is submitted promptly to ensure timely submissions of the SARP application and employer certification.
For further information or enquiries, please get in touch with Barry McGettrick, Pearse Walsh or your usual Matheson tax contact.