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SARP and R&D Special Tax Exemptions

Ireland

The Finance Bill, as initiated, provides for a new Special Assignee Relief Programme (SARP) and enhancements to the Research and Development (R&D) tax regime, which are intended to attract key personnel to Ireland. Taxand Ireland discusses the key tax advantages for businesses should they employ foreign qualified personnel to work in Ireland.

SARP
The proposed new SARP will operate by exempting 30% of a qualifying individual's employment earnings between EUR75,000 and EUR500,000 from Irish income tax. This means that up to EUR127,500 of the employee's annual income could be sheltered from Irish income tax. The relief does not cover PRSI or the Universal Social Charge. The cost of one family trip to the employee's home country and up to EUR5,000 per child in school fees can also be provided by the employer tax-free.

R&D Tax Credits
As currently drafted the Finance Bill proposes allowing companies to reward key employees (excluding directors), whose duties are primarily R&D related, with a portion of the company's R&D credit. The credit will only be available to employees who do not have more than a 5% shareholding and will be subject to the effective tax rate on the employment income not being reduced below 23%. However, unused credit may be carried forward by the employee.

Taxand Ireland looks at the Finance Bill announcement s in further detail

Taxand's Take


The proposed new SARP regime is more accessible than its predecessor due to the relaxation of a number of conditions, including the threshold salary amount. It also applies to Irish domiciled "ex pats". However, there may be cases where higher earning employees would have benefitted more under the previous regime.

As far as R&D Tax Credits, the new provisions proposed in the Bill will only be available to profit-making companies and therefore the changes may not benefit many start-ups. While these proposals could be improved upon, and may be as the Bill progresses through the legislative process, the attention now being given to personal taxation in the context of FDI is to be welcomed.

Your Taxand contact for further queries is:
Niamh Keogh
T. +353 1 489 6574
E. Niamh.Keogh@williamfry.ie

Taxand's Take Author