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Ireland Consults On Future Of Two Tax Reliefs

Friday, July 5, 2019

The Irish Government is holding a public consultation on the Special Assignee Relief Programme (SARP) and the Foreign Earnings Deduction (FED), as part of a broader independent review of the reliefs.

SARP provides income tax relief for certain people who are assigned to work in Ireland from abroad. Eligible employees can make a claim to have a proportion of their employment earnings disregarded for income tax. For 2019, the proportion is 30 percent of income over EUR75,000 (USD84,730), up to a limit of EUR1m.

The review is considering the continuing relevance of SARP and its performance in terms of attracting skilled individuals and key decision makers to Ireland-based operations, reducing the costs to employers of such assignments, and assisting with business expansion and employment creation. The review is also looking at the features of the Programme, including the method by which tax relief is given, and at the annual cost and efficiency of the scheme. It is additionally investigating the appropriateness of the present upper and lower limits on the quantum of income that should benefit from the relief.

Those who are resident in Ireland for tax purposes but spend some time working abroad may claim FED if they spend a specified number of days working in a relevant state during a particular period. For the tax years 2017 to 2020, the employee must have worked in the relevant state for at least 30 qualifying days.

The review is considering the continuing relevance of the FED incentive in the context of recent political developments, such as Brexit, and will analyze the annual cost, exchequer benefit, and take-up of the scheme. It will examine particular features of the regime, including the level of relief available, the method by which tax relief is given, the interaction of the scheme within the PAYE system, and the list of eligible countries in the context of government policy priorities.

Interested parties are invited to provide written responses during the consultation, which will close on July 14.