Tax breaks for executives who move to Ireland

FOREIGN EXECUTIVES who move to Ireland to take up key jobs in Irish-based companies will be able to avoid paying tax on 30 per cent of annual income between €75,000 and €500,000 under changes introduced in the Finance Bill.

The exemption applies to those who stay for at least one year and for up to five years. It is open to overseas employees arriving in Ireland over the next three years who can create employment and who might be turned off by the high 52 per cent marginal rate of tax.

Minister for Finance Michael Noonan announced the measure to help companies lure foreign staff in research and development who could create jobs in Ireland.

Mr Noonan said he introduced the special assignee relief programme on the advice of the IDA, which had said that other countries were offering similar incentives to foreign executives.

“This special incentive for key skilled people coming in from abroad is now part of the packages in other countries. They have a very effective one in the Netherlands. There is a potential loss of business. On that advice we have decided to introduce it.”

The Government had estimated the cost of the measure at €3 million at the start and €5 million in total, and that between 80 and 100 people might apply for it initially.

The Minister said this was one of a number of incentives introduced in the Finance Bill to try to create jobs and improve what was on offer to foreign companies.

It was “another piece of originality which will make the Irish package for attracting foreign investment into the country more attractive”.

“Unemployment is very high in the country, and I am prepared to do everything I possibly can do to nuance the IDA/Enterprise Ireland package to make Ireland more attractive and comparably as attractive.”

The Minister used the example of a skilled executive working in research and development who might create between 30 and 50 jobs by moving to a role in Ireland.

“The IDA and Enterprise Ireland have identified companies who have pinpointed research and development opportunities that are being lost because we don’t have an incentive along these lines.”

The Government is also introducing travel incentives to foreign executives, allowing them to claim tax relief on the “reasonable cost” of a return trip from their home country to Ireland for themselves, a spouse or partner and a child.

They will be allowed to claim tax relief for Irish primary or secondary school fees of up to €5,000 a year for each of their children.

Mr Noonan said the scheme would be evaluated over time and he did not expect a loss of revenue as executives would be paying a reduced level of income tax. “It is not a full tax break. It is worth trying out.”

Asked if it was unfair introducing incentives for certain groups, he said: “Any time you give a tax break to one group but don’t give it to another, you are favouring one particular group.”

He added: “I don’t think it is generous enough for any widespread attraction for tax avoidance.”

He said he believed the downside risks of the incentive were “negligible”.