Few avail of tax breaks to lure executives to State and boost exports

Personal tax measures designed to boost exports and lure international executives to the Republic had a poor success rate following their introduction in the 2012 Finance Act.

In the December 2012 budget Minister for Finance Michael Noonan announced two personal tax initiatives designed to aid both multinationals based here and homegrown businesses seeking to grow exports to emerging economies.

The first was the special assignee relief programme, geared to attract high-calibre, mobile executives to work in the Republic, something sought by multinationals.

The second was the foreign earnings deduction, a tax cut given to employees of Irish-based companies sent temporarily to emerging economies, initially Brazil, Russia, India and China but since expanded to some African countries.

Practical issues
However, few people have availed of either tax break. Only six individuals signed up for the special assignee relief in 2012, while just 12 took advantage of the foreign earnings deduction scheme.

Petrina Smyth, partner in the Dublin office of multinational solicitors Walkers, told a seminar hosted by the firm this week that technical and practical issues with both provisions prevented a larger number of people taking them up.

In the case of the special assignee scheme, people must be resident only in the Republic in order to qualify. She pointed out that during their first year, individuals who move here can be resident in two jurisdictions, and thus do not qualify.

With regard to the second, Ms Smyth explained that part of the qualifying grounds included staying four consecutive days in one or other of the designated states.

However, the days where people arrive and depart do not count as they have to be in the state for the whole day. “A lot of people did look at using this relief but found that it was not practical,” she said.

The foreign earnings deduction is available for employees who spend 60 days or more working in the designated states. The relief is for up €35,000 a year over 2012, 2013 and 2014.