Revenue Note for Guidance

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Revenue Note for Guidance

825C Special Assignee Relief Programme (SARP)

Summary

This section provides for income tax relief on a proportion of income earned by employees who are assigned to the State to work for a relevant employer, or an associated company. Prior to arrival in Ireland, each employee must have worked with a relevant employer for a minimum period of 6 months (12 months in the case of an employee who came to Ireland in the years 2012 to 2014).

Where certain conditions are satisfied, an employee can make a claim to have 30% of a portion of his or her income over €75,000 exempted from income tax depending on the year of arrival.

For the years 2012, 2013, and 2014, an upper income limit applied such that the portion of income exempted from income tax was restricted to 30% of an employee’s income between €75,000 and €500,000.

For the years 2015, 2016, 2017 and 2018 no upper threshold applied.

For the years 2019, 2020, 2021 and 2022, in the case of a relevant employee who first arrives in the State on or after 1 January 2019, to carry out employment duties, an upper income limit applies, such that the portion of income exempted from income tax is restricted to 30% of an employee’s income between €75,000 and €1,000,000.

For the tax years 2020, 2021 and 2022, in the case of a relevant employee who first arrives in the State on or before 31 December 2018, an upper income limit applies, such that the portion of income exempted from income tax is restricted to 30% of an employee’s income between €75,000 and €1,000,000.

The income relieved under this section is not exempt from the USC or PRSI.

The relief can be claimed for a maximum period of five consecutive tax years and applies in the case of employees who are assigned to the State in any of the years from 2012 to 2022.

Details

Definitions

(1) “PPS Number” in relation to an individual means the individual’s personal public service number.

“associated company”, in relation to a relevant employer, means a company which is that employer’s associated company within the meaning of section 432.

“relevant employer” means a company that is incorporated, and tax resident in a country or jurisdiction with which the State has a double taxation agreement or a tax information exchange agreement.

“relevant employment” means an employment held by a relevant employee with a relevant employer.

“relevant income” in relation to a relevant employee and a tax year means income, profits or gains from an employment with a relevant employer or with an associated company, net of pension contributions and tax-deductible expenses and excluding the following:

  • amounts represented by general benefits-in-kind,
  • the value of the benefit-in-kind in respect of a car,
  • amounts in respect of preferential loans,
  • severance payments,
  • amounts in respect of restrictive covenants,
  • any bonus, commission or other similar payments, whether contractual or otherwise,
  • amounts arising from the exercise of share options, and
  • any form of share-based remuneration.

“Revenue officer” means an officer of the Revenue Commissioners.

“tax year”, means a year of assessment for income tax purposes.

(2) & (2A)Relevant employee

(2) This subsection defines a “relevant employee” in the case of an individual who arrives in the State in any of the tax years 2012, 2013 or 2014.

(2)(a) An individual who arrives in the State in 2012, 2013 or 2014 is a relevant employee if he or she:

  • was a full-time employee of a relevant employer and exercised the duties of his or her employment with that relevant employer outside the State for the whole of the 12 months immediately prior to arrival in the State,
  • arrives in the State in 2012, 2013 or 2014 at the request of his or her relevant employer to –
    1. perform the duties of his or her employment in the State for that relevant employer, or
    2. take up employment in the State with an associated company of the relevant employer,
  • performs the duties of his or her employment in the State for that relevant employer or that associated company for a minimum period of 12 consecutive months from the date of his or her arrival in the State, and
  • was not resident in the State for each of the 5 tax years immediately prior to the tax year in which he or she first arrives in the State for the purpose of performing the duties for the relevant employer or associated company.

(2)(b) For the tax years 2012, 2013 and 2014, any duties performed outside the State that are merely incidental to the performance of the duties in the State are treated as performed in the State.

(2)(A) This subsection defines a ‘relevant employee’ in the case of an individual who arrives in the state in any of the tax years 2015 to 2022, as an individual who:

  • was a full-time employee of a relevant employer and exercised the duties of his or her employment with that relevant employer outside the State for the whole of the 6 months immediately prior to arrival in the State,
  • arrives in the State at the request of his or her relevant employer to-
    1. perform the duties of his or her employment in the State for that relevant employer, or
    2. take up employment in the State with an associated company and to perform duties in the State for that company,
  • performs the duties of his or her employment for that relevant employer or that associated company for a minimum period of 12 consecutive months from the date of his or her arrival in the State,
  • was not resident in the State for each of the 5 tax years immediately prior to the tax year in which he or she first arrives in the State for the purpose of performing the duties of his or her relevant employment or the duties of an employment with an associated company, and
  • in respect of whom the employer certifies to the Revenue Commissioners, within 30 days from the date the employee arrives in the State to perform the duties of his or her employment for the relevant employer or the associated company, that all the conditions set out in subsection (2A)(a) to (2A)(c) are met.

Note: for the year 2015 and subsequent years there is no restriction on the performance of duties outside the State by the SARP employee. This is notwithstanding that the relevant employee may have arrived in the State in 2012, 2013 or 2014.

Specified Amount

(2B) (a) This subsection contains the definition of “specified amount”. “Specified amount” means an amount determined by the formula

(A-B) x 30%

where –

(b) A is the amount of the relevant employee’s income, profits or gains from his or her employment in the State with a relevant employer or associated company, excluding any amount that is not assessed to tax in the State, and net of any superannuation contributions and tax-deductible expenses.

Where an individual is entitled to relief for foreign tax that part of the income on which relief is claimed cannot be taken into account in calculating the specified amount.

Note: For the years 2012, 2013, and 2014, A is restricted to €500,000.

For the years 2019, 2020, 2021 and 2022, in the case of a relevant employee who first arrives in the State on or after 1 January 2019, A is restricted to €1,000,000.

For the years 2020, 2021 and 2022, in the case of a relevant employee who first arrives in the State on or before 31 December 2018, A is restricted to €1,000,000.

B is €75,000.

(c) From the year 2015 and subsequent years, where an individual is employed in the State for less than a full tax year either in the year of arrival or year of departure, and has availed of SARP, the ‘B’ in the definition of specified amount is reduced proportionately.

The relief

(3) (3)(a) Where for a tax year a relevant employee-

  • is resident in the State for tax purposes,
  • performs the duties of his or her relevant employment or the duties of an employment with an associated company, and
  • has relevant income from his or her relevant employer (or associated company) which is not less than €75,000 or the annual equivalent, and

makes a claim for SARP, he or she shall be entitled to have a ‘specified amount’ of income, from his or her employment with a relevant employer (or associated company) disregarded for income tax purposes (but not USC or PRSI).

Note: For the years 2012, 2013 and 2014, an individual must be resident in the State for tax purposes and not resident elsewhere. For the years 2015 and subsequent years, an individual need only be resident in Ireland.

(3)(b) A relevant employee is entitled to SARP for 5 consecutive tax years commencing with the tax year he or she is first entitled to claim the relief.

Year of first entitlement to claim

(4) Employees who arrive into the State in 2012, 2013 or 2014

A relevant employee’s first year of entitlement to relief under this section will, in general, be the year he or she arrives in the State to carry out the duties of employment. However, where a relevant employee who arrives in the State in the tax years 2012, 2013 or 2014 is either not tax resident in the State or is tax resident in the State and also tax resident elsewhere, that employee is first entitled to claim relief in the year following the year of arrival into the State to carry out the duties of the employment. This is provided that he or she is tax resident in the State in that following tax year and for the years 2012, 2013 and 2014, as appropriate, is not also resident elsewhere in those years.

However, an individual who arrives in the State in 2014 and who is not tax resident in the State in that year is, if tax resident in 2015, first entitled to relief in 2015 notwithstanding the fact that he or she may also be resident elsewhere in 2015.

Employees who arrive into the State in the tax 2015 to 2022

An employee who arrives in the State in the tax years 2015 to 2022, is entitled to SARP in the tax year he or she first arrives in the State to carry out the duties of the employment, provided he or she is resident in the State in that tax year. This is notwithstanding the fact that he or she may also be resident elsewhere.

If the employee is not resident in the State for the year of arrival, then that employee is first entitled to claim relief in the year following the year he or she first arrives in the State to carry out the duties of the employment provided he or she is tax resident in the State in that following tax year. This is notwithstanding the fact that he or she may also be resident elsewhere in that year.

Reduction of thresholds

(5) For the tax years 2012, 2013 and 2014, where a relevant employee performs the duties of his or her employment in the State with the relevant employer (or associated company) for less than an entire tax year, the upper and lower thresholds (i.e. €500,000 and €75,000) and the amount of the relevant income are reduced proportionately. The apportionment for the tax years 2015 and subsequent years is provided for in subsection (2B)(c).

Travel costs and tuition fees

(6) In any tax year in respect of which a relevant employee is entitled to make a claim for relief under this section, the payment or reimbursement of the following by the relevant employer (or associated company) will not be chargeable to tax:

  • the reasonable costs associated with one return trip from the State for the relevant employee, his or her spouse or civil partner, and a child of the relevant employee or of the relevant employee’s spouse or civil partner to:
    1. the country of residence of the relevant employee prior to his or her arrival in the State,
    2. the country of residence of the relevant employee at the time of first employment by the relevant employer, or
    3. the country in which the relevant employee or his or her spouse is a national, and
  • the cost of school fees, not exceeding €5,000 per annum for each child of the relevant employee or for each child of his or her spouse or civil partner, paid to a school established in the State which has the approval of the Minister for Education and Skills for the purposes of providing primary or post-primary education to students.

Exceptions

(7) Where an individual makes a claim under this section, no relief will be given in respect of the Foreign Earnings Deduction (section 823A), Cross Border Relief (section 825A), or Research & Development relief (section 472D).

In addition the remittance basis does not apply to income from the employment where this section is claimed.

Chargeable person

(8) Any individual making a claim under this section shall be required to file a return of income for the years of assessment to which the claim relates.

Application of PAYE system

(9) Following an application, in such form as the Revenue Commissioners may require, by a relevant employer (or associated company), a Revenue Officer may confirm in writing to the relevant employer (or associated company) that no deduction of tax need be made under the PAYE system on the specified amount for a relevant employee.

Reporting requirements

(10) Where for a tax year a relevant employer (or associated company), certifies that an employee is a relevant employee, the relevant employer or associated company must deliver an annual return to the Revenue Commissioners, on or before 23 February following each tax year, setting out the following details in respect of each employee certified –

  • name and PPS number,
  • nationality,
  • country in which the relevant employee worked for the relevant employer prior to his or her first arrival in the State to perform duties of the relevant employment,
  • job title and brief description of the role of the relevant employee claiming SARP, and
  • the amount of income, profits or gains in respect of which tax was not deducted in accordance with subsection (9).

In addition the relevant employer (or associated company) must provide details of the increase in the number of employees, or details of the number of employees retained by the company as a result of the operation of the section together with the employer’s ‘registration number’.

Relief for foreign tax

(11) For the tax years 2012, 2013 and 2014, where an individual is entitled to relief for foreign tax, that part of the income on which relief is claimed cannot be taken into account in calculating the “specified amount” – see subsection (2B). This restriction also applies for the tax years 2015 and subsequent years as provided for in subsection (2B)(a).

Expenses

(12) Income from the relevant employment shall be deemed not to include any amount paid in respect of expenses incurred in the performance of the duties of the relevant employment.

Relevant Date: Finance Act 2021