Ireland is a beautiful place to live in. But the 25% tax system is a back, honestly. I would also step back if I were you. But the good news is there is a Special Assignee Relief Programme program.
This scheme offers income tax relief to employees assigned to Ireland by their overseas employer. Simply put, it reduces your tax, making Ireland an even better workplace. That’s why Around 61% of companies using SARP say it has helped boost employee retention rates.
Of course, there are rules to qualify—from minimum salary requirements to employer conditions. What are those? Ok, Let’s break it down!
Key Takeaways
- SARP helps reduce income tax for employees assigned to Ireland by an overseas employer on a company.
- 30% of income above €100,000 is tax-free, lowering the overall tax burden. But it changes depending on the situation.
- Individual Employers must register employees within 90 days of arrival in Ireland.
- To qualify, you must earn at least €100,000 in base salary (excluding bonuses/benefits).
What is the SARP Special Assignee Relief Programme?
The Special Assignee Relief Programme (SARP) is a tax break designed to attract top talent to Ireland. The scheme offers income tax savings to skilled workers assigned to Ireland by their overseas employer. It’s making the country a more attractive place to work. And it’s also easy for the company to hire talented people.
What does SARP do?
Some of your income is exempt from income tax, which can lead to big savings. It provides benefits, especially for high earners relocating to Ireland. But to qualify, you must meet specific conditions, like a minimum salary threshold and a direct assignment from a foreign employer.
How does it help for business?
SARP makes it easier to bring in experienced professionals for the right services without the full impact of Irish tax rates. For employees, it means keeping more earnings while working in Ireland. Let’s dive into how it works and who qualifies!
What Are The Conditions For Sarp In Ireland?
SARP sounds like a big opportunity for both the employee and the company owner. I’m sure it does, but don’t get too excited. There are a few requirement to get into the Special Assignee Relief Programme. Here are a few,
- Your employer must be based in a country that has a tax treaty or double taxation agreement with Ireland authority.
- Your assignment in Ireland must last at least a year durations.
- Before moving, you must have worked for the same employer outside Ireland for at least 6 months.
- Your basic annual salary must be at least €100,000 (bonuses, benefits, and stock options don’t count).
- You can still travel abroad, but you need to spend at least 30 working days extension per year in Ireland.
- Your employer must register you for SARP relief within 90 days of your arrival.
How Much Tax Relief Does SARP Provide?
From January 1 2024, SARP only applies to income tax, meaning you’ll effectively pay a 28% tax rate on earnings above the qualifying threshold (70% of the standard 40% rate). Keeps the cash flow stable. However,
But remember, it only covers income tax even after qualifying. Also, the relief doesn’t cover the Universal Social Charge (USC) or Irish Social Security (PRSI). So, those deductions will still apply. SARP applies for up to 5 years. It marks a great incentive for skilled professionals to move to Ireland.
How To Apply For Sarp?
Applying to SARP is easy, but you need to do it at the right time and the right way. Here’s what you need to do
Employer Registration
Your employer must register you for SARP with Revenue within 90 days of your arrival in Ireland. They’ll submit Form SARP 1A on your behalf. So, make sure they get it done on time with details.
Submit Your Documents
You’ll need to provide your employment contract with salary and assignment information\statements. And Proof or resources that you worked for the same employer for at least 6 months before relocating. Confirmation that your employer is based in a country with a tax treaty with Ireland.
Revenue Processing
Once submitted, Revenue reviews your application of your industry. If approved, your employer will apply the 30% guarantee tax relief directly to your salary through payroll. This will help you manage your expenses on revenue.
Annual Compliance
Each year, you’ll need to file a tax return to confirm you still qualify and keep receiving the relief. Since tax rules can get tricky, it’s always smart to check with a tax professional to make sure everything is in order, and you’re getting the most out of SARP!
How To Calculate Sarp?
If you are new, then thinking through it is a must. So it’s better to sit down with a calculator and calculate how much tax you need to pay. Cause in far everything seems easy. But in close, that may not be the case.
But no worries, you can easily figure out the amount with a formula,
(A-B) X 30%
Where:
- A = Your total annual base salary (before tax)
- B = €100,000 (the minimum income threshold for SARP)
So the calculation kinda goes like this,
Let’s say your salary (A) is €160,000. Using the formula:
(160,000−100,000)×30%(160,000 – 100,000) \times 30\%(160,000−100,000)×30%
Subtract €100,000 from your salary
160,000−100,000=60,000160,000 – 100,000 = 60,000160,000−100,000=60,000
Multiply by 30%
60,000×30%=18,00060,000 \times 30\% = 18,00060,000×30%=18,000So after the deduction, you will get €18,000 money of your salary, which is tax-free under SARP!
Summary
SARP relief lowers your taxable income for any expatriate, which can save you thousands of euros in taxes over five years. And you can enjoy a peaceful residency. If you’re earning over €100,000 and relocating to Ireland for work. It’s definitely worth considering! For precise calculations based on your situation, consulting a tax professional can help ensure you maximize your savings.
