Tax-re­lief in­cen­tives for for­eign ex­ec­u­tives ex­tended in Fi­nance Bill

¤500,000 cap and tax res­i­dency clause shed as scheme ex­tended to end of 2017 Bill in­cludes amend­ments to close off sev­eral tax-avoid­ance schemes

The Irish Times - Friday - The Ticket - - BUSINESS NEWS - EOIN BURKE-KENNEDY

The Gov­ern­ment is to re­lax the rules gov­ern­ing a spe­cial tax in­cen­tive scheme to at­tract for­eign ex­ec­u­tives into Ire­land after just 31 in­di­vid­u­als availed of it last year.

The move, con­tained in the Fi­nance Bill pub­lished yes­ter­day by Min­is­ter for Fi­nance Michael Noo­nan, is seen as another in­cen­tive to drive for­eign di­rect in­vest­ment here after the re­moval of the “Dou­ble Ir­ish” tax loop­hole.

The Spe­cial As­signee Re­lief Pro­gramme (Sarp), in­tro­duced in 2012, re­duces the cost to the em­ployer of bring­ing in highly paid ex­ec­u­tives or key de­ci­sion­mak­ers from abroad in the hope they will fur­ther ce­ment the company’s pres­ence here.

Un­der the orig­i­nal rules an em­ployee was able to make a claim to have 30 per cent of their in­come be­tween ¤75,000 and ¤500,000 dis­re­garded for in­come tax pur­poses.

How­ever, after a low take-up rate in its first two years of op­er­a­tion, Mr Noo­nan now plans to re­move the ¤500,000 cap, mak­ing it sig­nif­i­cantly more lu­cra­tive for high-paid in­di­vid­u­als to work here. The scheme is also to be ex­tended un­til at least the end of 2017.

Tax res­i­dency

The re­quire­ment to be tax res­i­dent in Ire­land and not else­where is also to be shed, mean­ing can­di­dates need only to be tax res­i­dent here. In ad­di­tion, the new rules al­low for the per­for­mance of work-re­lated du­ties out­side of the State and re­duce the re­quire­ment to have been em­ployed abroad by the same em­ployer from 12 months to six months.

In other Euro­pean coun­tries sim­i­lar tax schemes for se­nior ex­ec­u­tives at­tract thou­sands of ap­pli­ca­tions an­nu­ally.

The Fi­nance Bill, when en­acted, gives le­gal ef­fect to the var­i­ous tax­a­tion mea­sures an­nounced in the bud­get, in­clud­ing the re­duc­tion in the top rate of in­come tax from 41 per cent to 40 per cent as well as changes to the en­try thresh­olds for univer­sal so­cial charge.

The Bill also amends the State’s company tax res­i­dency rules to en­sure all com­pa­nies in­cor­po­rated in Ire­land will au­to­mat­i­cally be tax res­i­dent here, es­sen­tially clos­ing the “Dou­ble Ir­ish” mech­a­nism for new en­trants from Jan­uary 1st next.

One of the other cor­po­rate tax mea­sures an­nounced in the bud­get was the pos­si­ble es­tab­lish­ment of a “knowl­edge de­vel­op­ment box” that will grant tax ex­emp­tions to firms de­vel­op­ing new tech­nol­ogy in the coun­try.

There was no men­tion in the Bill of the pro­posed tax rate that might be as­so­ci­ated with the box as the es­tab­lish­ment of the scheme is still sub­ject to a pub­lic con­sul­ta­tion process.

Among the other pro­vi­sions con­tained in the Bill was the abo­li­tion of VAT charged on green fees in mem­ber-owned golf clubs from next March. This fol­lows a rul­ing by the Euro­pean Court of Jus­tice which found that levy­ing VAT when non-mem­bers pay green fees was not in line with EU law.

Tax-avoid ance schemes

The Bill also in­cludes amend­ments to close off a num­ber of tax-avoid­ance schemes which are linked to the use of ap­proved re­tire­ment funds and “vested” per­sonal re­tire­ment sav­ings ac­counts.

A re­lief from de­posit in­ter­est re­ten­tion tax (DIRT) on sav­ings used by first-time house buy­ers is also be­ing in­tro­duced in re­sponse to the tight­en­ing of the loan-to-value mort­gage re­quire­ments be­ing im­posed by the Cen­tral Bank. The Bill said this would en­able a first-time buyer pur­chas­ing a home to ap­ply for a re­fund of the DIRT they paid on the in­ter­est earned on sav-

Min­is­ter for Fi­nance Michael Noo­nan (right): said he was amending the tax re­lief pro­gramme ap­pli­ca­ble to for­eign ex­ec­u­tives.

PHO­TO­GRAPH: ALAN BETSON ings used to­wards the de­posit on a home.

The Gov­ern­ment also took the op­por­tu­nity to widen the def­i­ni­tion of tea, for the pur­poses of a zero VAT rate, to in­clude herbal teas and fruit in­fu­sions.

In­creased com­pet­i­tive­ness

Min­is­ter for Jobs, En­ter­prise and In­no­va­tion Richard Bru­ton said: “In relation to multi­na­tional com­pa­nies, the Fi­nance Bill so­lid­i­fies the work done in the bud­get to bring cer­tainty as well as in­creased com­pet­i­tive­ness to our cor­po­ra­tion tax regime.”

The tax re­lief on the pur­chase of new hy­brid elec­tric ve­hi­cles, due to run out on De­cem­ber 31st, has been ex­tended un­til the end of 2016. The re­lief is up to ¤1,500 on new hy­brid ve­hi­cles, which must be in se­ries pro­duc­tion. Plug-in hy­brids – which can run ex­clu­sively on elec­tric-only power over dis­tances of up to 50km – qual­ify for a grant of up to ¤2,500.

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