Workers relocating to Ireland can benefit from an income tax relief which is commonly known as the SARP (Special Assignee Relief Programme).
Employees can benefit from this tax relief if they have arrived in Ireland in 2012, 2013 or 2014 and have worked for the relevant employer for more than 12 months prior to arriving in Ireland. The relevant employing company must be tax resident in a country that Ireland has a double taxation agreement or tax information agreement with. For employees who arrive in Ireland in 2015, 2016 or 2017 the minimum period is reduced to six months. When employees arrive in Ireland the relevant employer must submit an application form to Revenue within 30 days prior to the employee starting in Ireland.
How can you calculate the tax relief?
It is important to note that in order to qualify for the relief an individual’s basic salary before benefits, bonuses etc. must not be less than €75,000.
Employees who arrive in Ireland in 2015 and earn, for example, €125,000 can claim a relief from income tax on €15,000 of their salary ((€125,000 – €75,000)*30%). In this example, this would be a tax saving of €6,000. This can be claimed each year for up to five years after arriving in Ireland.
How is the relief given?
Even though the employer has to submit an application form to Revenue before the employees commences work, they cannot claim the tax relief on the employees’ behalf. The relief is given after the year end in the form of a tax deduction and employees must submit an income tax return to Revenue.
What other conditions do employees need to be aware of?
The employees must not have been tax resident in Ireland for the previous 5 tax years immediately before their arrival in Ireland to take up employment. After taking up residence in Ireland employees must work here for a minimum period of 12 months and must not be tax resident elsewhere.
According to Revenue, employees who arrive in Ireland in 2015, 2016 or 2017 are entitled to SARP in the first tax year that they arrive in Ireland to carry out the duties of the employment, provided they are residents of Ireland in that year. This is notwithstanding the fact that they may also be residents elsewhere.
If you would like more information on SARP or would like assistance in filing your income tax return please contact us for a free consultation.