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SARP for Employers

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What is SARP relief?

SARP (Special Assignee Relief Programme) is an Income Tax relief available to certain individuals who have been assigned by a relevant employer to work in Ireland, either for that employer or an associated company of that employer.  The relief can be claimed for five consecutive tax years and is currently available to qualifying employees arriving in the years up to, and including, 2020.  The aim of SARP relief is to encourage multinational employers to redeploy talented employees into key positions within Ireland.

SARP conditions of qualification – what employers need to know

SARP can be claimed by employees who meet the following criteria:

  • The employee must have worked for their relevant employer outside of Ireland for the six months immediately prior to being employed here;
  • They must be contracted to work in Ireland for a minimum period of 12 months from the date they are first assigned here;
  • They must not have been tax resident in Ireland for the five years immediately prior to being assigned here;
  • They must be tax resident in Ireland for all of the years in which they claim SARP relief; and
  • Their basic salary must be a minimum of €75,000 per year.

It is important to note that employees who avail of SARP cannot claim any of the following:

  • Foreign Earnings Deduction;
  • Cross Border Relief; and
  • Research & Development Relief.

SARP for employers – how to calculate SARP

Under SARP relief, 30% of all income* over a threshold of €75,000 is exempt from income tax. For example; an employee who is paid €175,000 will not pay income tax on €30,000 of that income (€175,000 – €75,000 x 30%).  The marginal rate of income tax is 40%, so the value of the relief in this instance would be €12,000.

  • The exemption can be spread proportionately across the year, so the threshold for a monthly paid employee is €6,250 per month.
  • Expense reimbursements and any amounts contributed into pension schemes cannot be included in the calculations for SARP.
  • The exemption is limited to income tax only, so USC and PRSI should be deducted as normal.

The cost of one return trip for the employee and his or her family to their home country can be claimed tax free from their employer, as well as up to €5,000 per child for Irish school fees.

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SARP application – how to claim SARP

The employer must apply for SARP relief by completing a Form SARP 1A and submitting it to Revenue within 90 days of the employee’s arrival in the country.  If more than one employee is claiming SARP, the employer must submit a separate Form SARP 1A for each employee.

Employer / employee SARP reporting

Employers are obliged to file a SARP Employer Return, containing the pay and tax details for each SARP employee, to Revenue by 23 February following the year end in which SARP was claimed.

SARP employees are considered ‘chargeable persons for self-assessment’ by Revenue, which means they must file a Form 11 (Income Tax Return) to Revenue by 31 October following the year in which SARP was claimed.

How EisnerAmper Ireland can help

At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers claiming SARP relief for their staff.  From the initial application process and the monthly calculations, right through to the filing of the employer return, we can provide expert advice and insight every step of the way.

Our income tax specialists are also on hand should your employees require any advice and assistance with their income tax filing obligations. Learn more about our outsourced payroll services here.

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Request a payroll quote or request a callback from our specialists now.

* From 1 January 2019 the government plan to introduce a ceiling of €1 million on eligible income.

Latest News

Budget 2019 Payroll Considerations

Budget 2019 Payroll Considerations | Financial Services | EisnerAmper Ireland

With Budget 2019 announced, EisnerAmper Ireland examines its effect on take home pay and employer costs from 1 January 2019.

Income Tax

The most eye-catching of the measures introduced in Budget 2019, from an employee’s perspective, is the €750 increase in the 20% income tax rate ceiling (€1,500 for dual income households). This represents a potential increase in take home pay of €150 (€300 for dual income households). Other changes to income tax include a €300 increase in the home carer tax credit, and a €200 increase in the earned income tax credit – which will benefit proprietary directors.

Universal Social Charge (USC)

Other changes which will impact positively on most employees are in relation to USC. The 2% rate ceiling has been increased (see below), and rate band 3 (currently 4.75%) will be reduced to 4.5%. Overall the changes in USC rates could be worth up to €139 per year for those with higher incomes.

National Minimum Wage

An increase in the national minimum wage, from €9.55 per hour to €9.80 per hour, in and of itself should not affect the income of higher earners, however, to prevent full-time minimum wage earners from moving into a higher USC rate band the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, announced an increase in the 2% rate ceiling. This will benefit all employees with an annual income of over €19,372.

For employers, the national minimum wage increase has necessitated an increase in the employer PRSI higher rate threshold, which is a positive measure, although, an 0.1% increase in employer PRSI at both the lower and higher rates will have a negative impact on employer costs. It was also announced that there will be a further 0.1% increase in employer PRSI from 1 January 2020, which will see the higher rate at 11.05%.

For more information on Budget 2019 read our Budget 2019 Tax Considerations here.

Learn more about our outsourced payroll services here.

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Request a payroll quote or request a callback from our specialists now.

Payroll Insights

Payroll Insights Series – Welcome

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Welcome to EisnerAmper Ireland’s Payroll Insights Series. Here, our payroll specialists will provide insights into upcoming industry developments along with tips and resources to help you ensure your payroll compliance and maximise the business and employee value of your payroll function.

Stay up to date with our Payroll Insights Series

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Learn more about our outsourced payroll services here.

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Payroll Insights