Foreign Employment carried out in Ireland – Special Assignee Relief Programme (SARP)

Foreign Employment – Special Assignee Relief Programme (SARP)

The Finance Act 2012 introduced a Special Assignee Relief Programme (SARP) to reduce the cost to foreign employers of assigning key individuals from abroad to take up positions in the Irish based operations of their organisation. The SARP provisions only apply where an individual’s relevant income exceeds €75,000 per tax year.

Relevant income for the purposes of SARP is defined as the individual’s total income from that employment, excluding the following payments:

  • Reimbursement of expenses or the payment of travel and subsistence rates subject to Revenue limits,
  • The notional value of a BIK,
  • Bonus payments, contractual or otherwise,
  • Share options or other share based remuneration,
  • Termination payments,
  • Restrictive covenant payments.

The following payments which can be made by an employer will not give rise to a tax liability for the employee:

  • Pay for one return trip home per year for the employee, his spouse or partner and any children,
  • Pay up to €5000 towards the cost of primary or secondary education for any children of the employee or his partner.

To qualify for tax relief under SARP:

  • The employee must be assigned to work in Ireland from a Double taxation agreement country,
  • The employee must have been working for their employer for 12 months prior to being assigned to Ireland and all duties of the employment were performed outside of Ireland,
  • The employee must be assigned to Ireland in 2012,2013 or 2014,
  • The assignment must be for a minimum of 12 months and up to a maximum of 5 years,
  • All duties must be performed in Ireland (incidental duties of up to 30 days performed outside the State are permitted),
  • The employee must not have been resident in Ireland in the 5 years prior to their arrival.

A qualifying employee’s income can be reduced by the “specified amount” before calculation of his income tax liability. The specified amount is calculated as follows:

                                                                        (A-B) X 30%

Where: A is the amount of the employee’s income which is subject to tax in the State after deduction of a qualifying pension contribution to Revenue approved company pension, personal pension, PRSA or overseas pension plan, subject to a maximum figure of €500,000.

              B is €75,000

Example 4

Frank has been assigned to Ireland on a temporary assignment from Japan and fulfils the conditions of the SARP programme. He receives the following remuneration package:

Annual Salary €175,000

Annual Bonus 10% of salary

Company Car Notional Value of €15,000

One return trip per year to Japan valued at €2,500

Calculate how much relief he will obtain under the SARP provisions, and the amount of his taxable income

Solution 4

Total Taxable income:    Salary         €175,000

                                    Bonus:         €17,500

                        Company Car:          €15,000


Relevant income:       Salary:          €175,000

As relevant income exceeds €75,000, he qualifies for relief under SARP.

Specified amount                    (€207,500 – €75,000) x 30% =€39,750

Revised taxable income:               €207,500-€39,750 = €167,750.

Assuming tax was deducted on the full amount of the earnings through the payroll system on the full amount of the earnings, a tax refund of €16,297.50 (€39,750 x 41%) could be claimed following the end of the tax year.

Where an individual is not resident in Ireland for a complete tax year, the €75,000 and €5000, 000 threshold will be reduced accordingly. For example, if an individual arrives in Ireland on 1st July 2012, the thresholds will be halved so it would apply to relevant income in excess of €37,500 and €250,000.

The relief should be claimed by the employee following the end of the tax year; however, the Act permits an employer to make an application to Revenue for approval to pay an amount of the employee’s income equal to the specified amount (i.e. €39,750 in the above example) without deduction of income tax. Normal USC rules will apply to all payments, as SARP only grants tax relief and not USC relief.

Where an individual holds a form E101, Form A1 or a Certificate of Coverage issued from another country, no PRSI is payable in Ireland for the duration covered by the form or certificate. Otherwise, PRSI must be deducted