Sports stars to benefit from tax change
Competitors will no longer have to end careers in Ireland to qualify for income tax relief on retirement
The change opens the possibility of stars such as Munster’s Paul O’Connell spending the final couple of years of their career abroad on big money contracts and still being able to claim relief on their previous earnings here.
Irish sports stars will no longer have to finish their careers here to qualify for income tax relief on retirement under a change made in response to EU Commission concerns.
Under an amendment to the scheme published yesterday as part of the Finance Bill, a sportsperson may claim the relief if they are resident in an EEA or EFTA country at the time of retirement.
This comprises all the EU countries, as well as Iceland, Norway, Switzerland and Liechtenstein.
This opens up the possibility of an experienced rugby international such as Paul O’Connell spending the final couple of years of their career in France or England on big money contracts and still being able to claim the relief on their previous earnings in Ireland.
The total deduction that retiring sports persons can claim is now based on the Irish income arising from up to 10 of the 15 years prior to their retirement, including the year they retire. Previously, it was on the 10 years up to retirement.
The sports person is entitled to a relief of 40 per cent on their income from the sport. This cannot include earnings from sponsorship or image rights.
The sports person must be permanently retired from their sport to claim the rebate from a scheme that was introduced by Charlie McCreevy during his time as minister for finance.
This change also opens up the possibility of a player such as Johnny Sexton being able to claim relief on the seasons he played for Leinster before heading to France earlier this year.
Under the old rules, Sexton would have had to return to a club in Ireland in advance of retiring from the sport to be eligible for this rebate.
This relief is open to a range of sports but mostly applies to rugby players given the professional structures in place for the four provincial teams operated by the Irish Rugby Football Union – Leinster, Munster, Connacht and Ulster.
However, professional golfers based here, or runners, boxers, jockeys or League of Ireland soccer players, might also be in the frame for a rebate on their taxes on retirement.