Special Assignment Relief Programme (SARP)
The new Special Assignment Relief Programme (SARP) was introduced in 2012 to assist Irish companies and multinational companies in attracting key talent to Ireland. The relief was initially introduced for tax years 2012, 2013 and 2014. In the Finance Act 2014 under Section 15 the relief was extended to include individuals assigned to work in the State during any of the tax years 2015, 2016 and 2017. In Budget 2017 it was further extended by 3 years to 2020. SARP provides for income tax relief on a proportion of income earned by an individual who is assigned by his or her relevant employer to work in the State.
What are the qualifying conditions for SARP?
In order to avail of the relief, the individual must meet the following conditions:
- Relevant income exceeding €75,000 per annum
Relevant income for the purposes of SARP is defined as the individual’s total earned income from that employment, excluding the following payments;
- Reimbursement of expenses subject to Revenue guidelines
- Bonus payments, contractual or otherwise
- Share options or any other share based remuneration
- Notional value of BIK (benefit-in-kind)
- Restrictive covenant payments
- Termination payments
- Be a full-time employee of a company tax resident in a country with which Ireland has a Double Taxation Agreement (or information exchange agreement) for 6 months* immediately prior to arrival, it does not apply to organisational “new hires”.
- The assignment must be for a minimum of 12 months
- The individual must become tax resident in Ireland and not due to pay tax in another country
- The individual must not have been tax resident in Ireland for the five tax years immediately preceding the year of arrival.
How the scheme works?
The relief operates by allowing a 30% deduction from employment income in excess of €75,000.
The relief may be claimed real time through the PAYE system or alternatively after the year end via a tax return (Form 11). The formula used to calculate the specified amount is as follows:
(A – B) x 30%
Where A is the amount of the individuals income which is subject to tax in the State after deduction of a qualifying pension contribution to a Revenue approved occupational, personal, PRSA or overseas scheme, and is no longer subject to a maximum threshold.**
B is €75,000
A qualifying individual earns a base salary of €250,000 together with a company car (BIK) of €10,000 and makes contributions of €20,000 into a Revenue approved scheme.
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The overall value of the relief is the specified amount calculated at the individual’s marginal tax rate, in this case: €49,500 x 40% = €19,800
Note: Relief is from income tax only – PRSI*** and USC are not relieved under SARP
What other benefits are available under SARP?
Where an individual qualifies for this relief, they may also benefit from the following payments free of tax:
- One “home leave” trip per year for the individual and their family.
- School fees up to €5,000 per child, per annum (primary or post-primary education)
What are the reporting requirements?
- Employee: Form 11 self-assessment tax return (by 31st October each year)
- Employer: SARP(1a) application form (within 30 days of the individual’s arrival)
SARP employer return (by 15th February each year)
*Previously 12 months prior to 1st January 2015
** Previously a threshold of €500,000 applied prior to 1st January 2015
*** Where an individual holds a Form E101, Form A1 or a Certificate of Coverage issued from another country, no PRSI is payable in Ireland.