Brendan Griffin (Kerry, Fine Gael)
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22. To ask the Minister for Finance the tax incentives and other incentives available to Irish emigrants hoping to return home to take up employment; and if he will make a statement on the matter. [8646/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that, as a member of the European Union, Ireland must comply with the freedom of movement principles of the European Treaties.  It is likely that any tax incentive which would only be available to returning Irish emigrants, would be in breach of these freedoms.

The provision of a tax reduction to such individuals could also have the potential to distort the labour market. It could allow employers to offer reduced gross salaries to returning emigrants, which could put existing Irish resident individuals at a disadvantage when competing for employment opportunities.

Notwithstanding the above, there are some tax incentives which could be availed of by individuals entering the State to take up employment, including returning Irish emigrants.

Such an individual could elect for "split year" treatment in the year of arrival, which involves the discounting of any non-Irish employment income for tax purposes where it was earned before an individual permanently moves to Ireland.  In broad terms, an individual is entitled to split year treatment where they enter the State and become resident at some time during a tax year, with the intention of remaining and being resident in the following tax year also. 

Under split year treatment, an individual is entitled to full personal tax credits and allowances for the year of arrival, notwithstanding the fact that employment income earned in the year of arrival, prior to the date of arrival, is not subject to Irish tax.  Such individuals are chargeable to tax on the full amount of any non-employment income, such as investment income, for the year of arrival. 

A separate relief which may be available to returning Irish emigrants who meet the necessary conditions is the Special Assignee Relief Programme (SARP), an income tax incentive that allows relief on a proportion of income earned by an employee who is assigned by his or her relevant employer to work in Ireland for that employer, or for an associated company of that relevant employer.  For 2015 and subsequent years, this relief is available to qualifying individuals on 30% of an employee's income over €75,000.

In order to avail of the SARP incentive, an employee arriving in Ireland must have worked for the relevant employer for a minimum period of 6 months prior to arrival in Ireland and must not have been resident in the State for the 5 tax years immediately preceding the tax year in which he or she arrives in the State.  A relevant employer is a company that is incorporated and tax resident in a country with which Ireland has a double taxation agreement or a tax information exchange agreement.

The Deputy will also be aware of the income tax and Universal Social Charge reductions included in the last two Budgets, which have reduced the lowest three rates of USC, and the marginal rate of income tax payable by those on incomes of up to €70,044 per annum. As stated previously, I believe that these changes make Ireland a more attractive proposition, from an income tax perspective, for those Irish emigrants that may wish to return home.