Cost of tax relief for overseas executives jumps by over 60%

Loss to exchequer in 2015 €9.5m as almost 600 executives availed of relief programme

Some 224 employees availing of Sarp earned between €75,000 and €150,000 while 92 employees benefitting from the scheme earned in excess of €375,000. Photograph: Getty Images

Some 224 employees availing of Sarp earned between €75,000 and €150,000 while 92 employees benefitting from the scheme earned in excess of €375,000. Photograph: Getty Images

 

The tax cost of the special assignee relief programme (Sarp) jumped by more than 61 per cent to €9.5 million in the 2015 tax year compared to the previous year.

This represents a significant increase on the €100,000 cost of the programme when it was introduced in 2012.

According to recently released figures from the department of finance, 586 employees availed of the Sarp tax benefits in 2015, up from 302 the previous year. The figures show that the State lost in excess of €16,210 per executive who claimed relief through the scheme in 2015. The scheme applies to executives from abroad who employers base them in Ireland.

A majority of 224 employees availing of the programme earned between €75,000 and €150,000 while 92 employees benefitting from the scheme earned in excess of €375,000. A total of 155 employees with salaries ranging from €150,001 and €225,000 used the scheme last year, while 81 earned between €225,001 and €300,000.

The salary band with the smallest number of employees was the range between €300,001 and €375,000. Only 34 availed of the programme in that category.

The financial services industry was the sector with the biggest take-up of Sarp. It had 168 employees using the scheme while the IT sector had 167 employees availing of the programme.

Figures from employers show that 603 employees were retained in 2015 due to the existence of the scheme, while there was an increase of 591 employees in the same year as a result of Sarp.

“Sarp has failed, yet the government keep breathing life into it by extending it. There is no evidence of a connection between the jobs we are told have been created and the tax breaks given”, said Sinn Féin finance spokesman Pearse Doherty.

Joan Burton told the Dáil when Sarp was introduced that 50 jobs would be created for every person availing of Sarp.

“This figure of 591 jobs [created] could be grossly inflated because the created jobs is a totally self declared figure. It is still less than one job for every Sarp tax break given to a high earner at a cost of €9.5 million in 2015,” he said.

Fianna Fáil finance spokesman Michael McGrath said he is in favour of the scheme “provided there is evidence of a clear link between tax incentives and the creation and retention of high quality jobs.

“If you can attract key decision makers then additional jobs and investment will follow. ”

He also noted that, to be fair to all taxpayers, “we have to be able to ensure that the benefits of the scheme outweigh the costs”.

The scheme provides income tax relief on a proportion of income earned by an employee assigned to work in the State for their employer. This means that the employee must have worked for their company for at least six months in another jurisdiction.

If they fulfil that requirement they can claim to have 30 per cent of their income over €75,000 disregarded for income tax purposes. But that employee is not exempt from paying the universal social charge or pay related social insurance.