Written answers

Thursday, 16 December 2021

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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145. To ask the Minister for Finance his plans for a review of the special assignee relief programme; and if he will make a statement on the matter. [62329/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Special Assignee Relief Programme (SARP) is designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad, to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland. The scheme currently has a sunset date of 31 December 2022.

Ireland’s enterprise policy is based on export-led growth. Foreign Direct Investment (FDI) has been and continues to be an integral part of Ireland’s economic development. SARP is part of our FDI policy which allows our country to be competitive and attract certain senior decision-makers here to particular companies. This is fundamental to the creation and retention of other jobs.

The existence of an incentive like SARP is an acknowledgement that we are competing on a global basis for highly skilled and mobile executives. The competition for this talent is intense, particularly for the types of skills required to facilitate the development and expansion of businesses in Ireland. If we cease this scheme, it makes what we offer uncompetitive versus the offerings from competitor jurisdictions, for example France, Portugal, the Netherlands and Italy – to name but a few.

The existence of similar (and indeed more attractive) special assignee type tax reliefs in competitor jurisdictions creates a market failure that would not be addressed, but for the continued existence of SARP.

On Budget Day, the annual Revenue report on SARP for 2019 was published. It found a significant reversal in the overall cost of the scheme in 2019 (€38.2m) as compared with 2018 when the cost was €42.4m. This is attributable at least in part, to my decision to introduce a salary cap of €1m on the amount of a person's income that can benefit from the scheme in Finance Act 2018. The change applied from 1 January 2019 for new entrants and from 1 January 2020 for existing recipients.

Furthermore, the aggregate number of jobs that were reported as created and retained as a result of the scheme has increased since 2018. There were 379 additional employees compared with 236 in 2018 and the number of employees retained was 483, compared with 348 in 2018. This combined total of 862 SARP-related jobs in 2019 represents a cost of €44,000 per job created or retained, a decrease in cost per job compared with 2018, when there were 584 SARP supported jobs at an average cost of €73,000 each. This represents a decrease in cost of over 39%.

The benefits of SARP, aside from enhancing our international competitiveness, are detailed clearly in the Indecon report and they include:

- Increased employment and retention of staff within SARP companies;

- Associated additional investment in the economy of the order of €25 million;

- Additional Corporation Tax receipts;

- Additional PAYE receipts; and

- R&D spill-over activity.

In 2019, I commissioned an independent review of the scheme. The report of the review confirmed to me the strong policy rationale for the continued relevance of SARP to the Irish economy. The report is available on the Department of Finance website.

The review highlights the following data regarding companies that availed of SARP for the year 2017:

- they paid over €2.5 billion in corporation tax;

- they employed over 155,00 individuals; and,

- they paid over €1.9 billion in PAYE taxes.

I recognise that there is, of course, a balance to be struck between the principle of horizontal equity within the tax system and the need to compete internationally for highly skilled and mobile personnel. In this regard, and in order to seek to ensure that the appropriate balance is maintained, the issue is kept under regular review through detailed examinations of the type carried out by Indecon in 2019. As the scheme sunsets next year, there will be a further opportunity for review.


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